2007 (7) TMI 253 - AT - Customs

Mfg. brass ingots, wire, rods etc. out of imported Dross - Allegation that the appellant (EOU) has cleared segregation generated items Brass Granules to DTA on payment of Excise duty instead of Central excise duty equaling aggregate of duties of Customs appellant submission that they have not sold the segregated material into DTA but manufactured items by paying 50% of the customs duty as excise duty after permission of sale by Development Commissioner, is correct demand set aside

Summary

Issues:
1. Appeal against order demanding customs and central excise duty with penalty.
2. Allegation of clearing segregation generated items in DTA.
3. Dispute over payment of central excise duty on finished goods.
4. Defense of appellant regarding manufacturing and sale of segregated material.
5. Grant of manufacturing license and utilization of imported dross.

Analysis:
1. The case involves two appeals filed by a 100% EOU against an order demanding customs duty, central excise duty, and imposing a penalty under relevant sections of the Central Excise Act, 1944, and Customs Act, 1962. The Commissioner of Central Excise and Customs (Appeals) upheld the original order, leading to the appeals before the Tribunal.

2. The appellant was accused of clearing segregation generated items, specifically Brass Granules, in DTA without proper payment of central excise duty. The revenue contended that the appellant was required to pay central excise duty equal to the aggregate of duties of customs on such finished goods, alleging a shortfall in duty payment.

3. The appellant defended themselves by stating that they had not sold the segregated material in DTA but had manufactured items by paying 50% of the customs duty as excise duty. They argued that the requirement to pay 100% customs duty along with excise duty was unjustified. The appellant claimed that the imported material was fully utilized in manufacturing brass granules, which were then diverted to DTA after paying the necessary duty.

4. The Tribunal considered the evidence on record, including the permission from the Development Commissioner for the sale of material in the DTA market. After evaluating the submissions, the Tribunal found the impugned orders to be erroneous and set them aside. Consequently, both appeals were allowed in favor of the appellant.

5. The judgment highlights the importance of proper compliance with duty payment regulations, the distinction between manufacturing and selling activities, and the significance of permissions granted by relevant authorities. The case underscores the need for a thorough examination of facts and legal provisions to ensure a just outcome in matters of customs and excise duty disputes.