2008 (6) TMI 138 - AT - Central Excise

Demand on dies - die comes into existence at the job worker premises only and merely because end plates and hollow pipes were supplied separately does not mean that the manufacture has taken place at the appellant s premises when the end plates are fitted on the hollow pipes portion - duty was required to be paid by the job worker, and not by appellants - demand on account of shortages noticed in the scrap is upheld - Appeal is partly allowed

Summary

Issues:
1. Duty demand on manufactured dies
2. Shortage in scrap received

Analysis:
1. The case involved a demand for duty on dies alleged to have been manufactured by the appellants. The appellants argued that the dies were manufactured by a job worker, making the job worker responsible as the actual manufacturer. They contended that the end plates were fitted on hollow pipes at the job worker's premises, and the mere fitting of end plates at their premises did not constitute manufacturing. The tribunal agreed, ruling that the duty should have been paid by the job worker, not the appellants. Consequently, the demand of Rs. 84,698/- and the penalty were set aside.

2. Regarding the shortage in scrap received by the appellants, they claimed that the shortage was theoretical and not due to clandestine removal. They argued that even if some scrap was removed without accountal, the duty liability should be reduced based on the proportion of modvatable and non-modvatable inputs. However, the tribunal noted that the appellants had not raised the issue of modvatable and non-modvatable scrap before the lower authorities. As the shortage was confirmed and credit was taken without receipt of inputs, the demand of Rs. 2,25,783/- and the penalty were upheld. The tribunal partially allowed the appeal, setting aside the duty demand on dies but upholding the demand for shortage in scrap received.

This judgment highlights the importance of correctly attributing manufacturing responsibility and maintaining proper records to support claims, emphasizing the need for consistency in arguments presented at different stages of the legal process.