2015 (9) TMI 820 - AT - Central Excise

D100% EOU - DTA clearance - Denial of benefit of Notification No. 8/97-CE dated 01/3/97 - Non maintenance of separate accounts - Held that - The admitted fact is that the appellant did not maintain separate accounts of raw material during the period. The appellant were admittedly clearing a very small portion of the production (less than 1%) in DTA. It is seen that the tripods cleared in DTA have suffered only concessional rate of duty on the ground that they were made out of indigenous raw material only. It is established by the appellant that they had no imports of raw material prior to 13/01/2004. The goods for DTA clearances now subject matter of dispute were made prior to that date. The demand for differential duty were sustained only on the ground that no separate accounts were maintained and the appellant failed to establish that the said items were manufactured only out of indigenous raw material. Considering the facts now pleaded by the appellant it is clear that no differential duty can be demanded as there was no import of raw materials prior to the date of manufacture of goods later cleared to DTA. These were earlier rejected/returned tripods. Though the appellant pleaded these grounds before the lower authority no findings were given except the observation that the same is not subject matter of the instance case as the appellant themselves paid the duty without insistence by the Department. However, in the order duty on tripods and aluminium dust and slag was confirmed by the Original Authority. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility for availing Notification No. 8/97-CE for clearance of goods to DTA.
2. Treatment of rejected tripods in relation to imported and indigenous raw materials.
3. Classification and excisability of aluminium dust and slag.
4. Requirement of maintaining separate records for raw materials usage to claim concessions.

Analysis:
1. The appellant, a 100% EOU manufacturing tripods, faced a demand of &8377;26,493 for short payment due to unclear records of imported and indigenous raw materials for goods cleared to DTA under Notification No. 8/97-CE. The Original Authority and Commissioner (Appeals) upheld the demand, emphasizing the lack of separate records.

2. The appellant contended that rejected tripods valued at &8377;87,350 were produced before the first import of aluminium ingots, making them eligible for the notification. As no imports occurred before a specific date, all raw materials used were indigenous for the rejected tripods, which were returned stock from a foreign buyer.

3. Regarding aluminium dust and slag, the appellant argued that they were non-excisable dross and skimming, citing a Supreme Court judgment. The Tribunal agreed, noting the absence of differential duty liability for these items due to their nature and origin during manufacturing.

4. The Tribunal observed that the appellant did not maintain separate records but cleared only a small portion of production to DTA. Since no imports occurred before the manufacture of disputed goods, which were rejected tripods, differential duty could not be demanded. The lack of separate accounts did not disqualify the appellant from the concession under Notification No. 8/97-CE.

5. In conclusion, the Tribunal allowed the appeal, considering the appellant's arguments on the rejected tripods and the non-excisability of aluminium dust and slag. The decision provided consequential relief to the appellant based on the findings and legal interpretations presented during the proceedings.