2016 (10) TMI 734 - AT - Central Excise

Clearance of various assemblies, components etc. (CETH 9305.00) without payment of duty - Held that - While there is no dispute on the legal principle upheld by the impugned order, the duty liability of appellant has to be found on the basis of already discharged duty, exclusion of bought out items and imported SRGM. If needed the Original Authority can re-verify the correct payment of duty by the appellant with the records - appeal disposed off.

Summary

Issues:
Classification of goods for duty payment under Central Excise Tariff Heading, availability of exemption under Notification No. 67/95-CE, duty liability on parts/sub-assemblies used in manufacturing exempted goods.

Analysis:
The case involved an appeal against an order dated 09/10/2006 of the Commissioner (Appeals), Meerut I, concerning the classification and duty liability of Super Rapid Gun Mounts (SRGM) manufactured and cleared to the Indian Navy. The appellants claimed nil rate of duty on SRGM under Central Excise Tariff Heading 9301.00 and duty at 24% on parts/assemblies of SRGM manufactured and captively used. The Jurisdictional Deputy Commissioner held that the appellants cleared complete SRGMs, not parts or sections, which are nil rate under the tariff, dropping proceedings against the appellant.

The Revenue contended that duty should be paid on parts/sub-assemblies used in manufacturing SRGMs, even though the final product was exempt. The First Appellate Authority upheld this view, stating that duty must be discharged on all individual parts/sub-assemblies used in combination to manufacture SRGMs. The appellants then appealed this decision, arguing that they discharged duty on parts/components/sub-assemblies used in the manufacture of nil duty SRGMs and did not avail credit for duty paid on imported parts.

The Appellate Tribunal noted that fully manufactured SRGMs were cleared by the appellant, subject to nil rate duty. Both bought out and appellant-manufactured parts were used in manufacturing SRGMs, with no duty credit availed for bought out items. The tribunal found no grounds for duty demand against the appellant, confirming the duty liability on parts/components manufactured and captively used in the manufacture of exempted SRGMs. The appellant's grievance against the order was clarified, emphasizing the duty liability based on already discharged duty, exclusion of bought out items, and imported SRGMs.

The tribunal disposed of the appeal, emphasizing the need for the Original Authority to re-verify the correct payment of duty by the appellant with the records, based on the admitted facts and legal principles upheld by the impugned order.