2015 (9) TMI 89 - AT - Central Excise

Duty demand - Job work - clearances for export made by the appellant from the job worker s premises - Whether in terms of sub-rule (2) of Rule 12 B, the appellant company was liable to pay duty in respect of these goods - Held that - Person whether a manufacturer or a trader can export the goods under bond under Rule 19 from the factory where the same have been manufactured. Since in the present case, there is no dispute that the necessary conditions for export under bond without payment of duty under Rule 19 have been satisfied and the prescribed procedure had been followed, the Department s stand that the duty would be chargeable on the clearance made by the appellant for export from job worker s premises is not correct. In view of this, the impugned order upholding the duty demand of ₹ 19,41,761/- along with interest and imposing penalty of equal amount on the appellant is not sustainable and has to be set aside. Confiscation of goods - Imposition of redemption fine - Penalty under Rule 26 - Held that - while at the time of officers visit to the factory on 24.11.2004, the RG-I register was not there but the same was produced on 29.11.2004 - imposition of fine of ₹ 50,000/- is on a much higher side, when duty involved on the goods is only ₹ 38,000/-. In view of this, the redemption fine is reduced - penalty under Rule 26 is not sustainable. - Decided partly in favour of assessee.

Summary

Issues:
1. Interpretation of Rule 12 B of the Central Excise Rules regarding duty payment for goods exported through job worker.
2. Confiscation of goods for non-accountal and imposition of penalty.

Issue 1: Interpretation of Rule 12 B and Duty Payment for Exported Goods:

During the period in question, the appellant company, registered under Rule 12 B of the Central Excise Rules, did not have manufacturing infrastructure but procured grey fabrics processed by job workers for export. The dispute arose regarding duty payment for goods exported from the job worker's premises. The Department contended that duty was chargeable under sub-rule (2) of Rule 12 B if goods were cleared for export through a job worker. However, the appellant argued that as per CBEC Circular and Rule 19 of the Central Excise Rules, duty-free clearance for export was permissible if the necessary conditions were met. The Tribunal held that the appellant, treated as a manufacturer under the Circular, could export goods under bond without duty payment under Rule 19. Therefore, the duty demand of Rs. 19,41,761 along with interest and penalty was set aside.

Issue 2: Confiscation of Goods and Imposition of Penalty:

The Department had seized processed fabrics valued at Rs. 5,95,136 due to lack of records during an inspection. A show cause notice was issued demanding duty, interest, penalty, and seeking confiscation of the seized goods. The Joint Commissioner confirmed the duty demand, imposed penalties, and ordered confiscation. The appellant contended that the goods were accounted for, and the records were produced later. The Tribunal found that though the RG-I register was not available during inspection, it was produced later, and the penalty imposed was excessive compared to the duty involved. The redemption fine for confiscation was reduced to Rs. 10,000. The penalty imposed on the Director under Rule 26 was deemed unsustainable as the conditions for penalty were not met.

In conclusion, the duty demand against the appellant company, penalties, and the penalty on the Director were set aside. The confiscation of goods was upheld, but the redemption fine was reduced. The appeals were disposed of accordingly.