2008 (3) TMI 194 - AT - Central Excise

Manufacture of Transformer Coils - alleged that the appellants failed to seek permission from the Commissioner for repairing of transformers in terms of Rule 16(3) of Central Excise Rules, 2002 - In the present case, the appellant has not claimed credit on receipt of transformer (old and used) for repair, and therefore, Rule 16 of the said Rules is not applicable - penal action (under Rule 27 of the Central Excise Rules, 2002) against appellants is not justified

Summary

Issues:
Imposition of penalty under Rule 27 of the Central Excise Rules, 2002 for failure to seek permission for repairing transformers.

Analysis:
The case involved an appeal against the imposition of penalties under Rule 27 of the Central Excise Rules, 2002 on the appellants who were engaged in manufacturing Transformer Coils and repairing transformers at their factory. The Adjudicating Authority initially dropped the penal action, but the Revenue appealed, leading to the imposition of a penalty of Rs. 2,000/- on each appellant by the Commissioner (Appeals).

Upon reviewing the case, it was found that the appellants were not availing Cenvat credit on old and used transformers for repair jobs. The Adjudicating Authority based the allegations on a withdrawn Trade Notice and another Trade Notice issued by the Commissioner of Central Excise, Allahabad. The Commissioner (Appeals) held that under Rule 16(3) of the Central Excise Rules, 2002, the appellants should have sought permission from the Commissioner for receiving goods for re-making, but the specific authority was not mentioned. However, it was noted that Rule 16 of the said Rules pertains to the credit of duty on goods brought to the factory, which was not claimed by the appellant in this case. Therefore, the Tribunal disagreed with the Commissioner (Appeals) and allowed the appeals, restoring the adjudication orders.

In conclusion, the Tribunal found that the appellants were not required to seek permission under Rule 16(3) of the Central Excise Rules, 2002 as they were not claiming credit on the receipt of transformers for repair. The decision highlighted the importance of correctly applying relevant rules and regulations in excise matters to avoid unnecessary penalties and legal actions.