2008 (10) TMI 227 - AT - Central Excise

Job Work Demand of duty - There is no dispute that the appellants M/s. Devi Metal Works had only converted aluminium plates into sheets on job work basis during the material period. There is no demand for clearances of such aluminium sheets by M/s. Devi Metal Works; the demand is on aluminium circles manufactured by M/s. Ganesh Industries during the material period out of the aluminium sheets supplied by M/s. Devi Metal Works. held that - As the aluminium circles were not manufactured by M/s. Devi Metal Works, demand of duty on them for the clearances of aluminium circles is not at all justified and deserves to be vacated demand and penalty set aside.

Summary

Issues:
1. Demand of duty, interest, and penalties on M/s. Devi Metal Works and Proprietors of related firms.
2. Applicability of duty liability on aluminium circles manufactured by M/s. Ganesh Industries.
3. Interpretation of job work under relevant notifications.
4. Validity of penalties imposed on the parties involved.

Analysis:

Issue 1: Demand of duty, interest, and penalties
The case involved appeals by M/s. Devi Metal Works and related parties against the demand of duty, interest, and penalties imposed on them. The original authority confirmed a demand of duty on M/s. Devi Metal Works under Section 11A(1) of the Act and imposed penalties under Section 11AC. The Commissioner (Appeals) upheld the demand, leading to the appeal before the Appellate Tribunal.

Issue 2: Duty liability on aluminium circles
The Tribunal found that M/s. Devi Metal Works had only converted aluminium plates into sheets on a job work basis, and the demand was on aluminium circles manufactured by M/s. Ganesh Industries using the supplied sheets. As M/s. Devi Metal Works did not manufacture the circles, the demand of duty on them was deemed unjustified and vacated. Consequently, penalties on the parties were also revoked.

Issue 3: Interpretation of job work
The Tribunal considered the interpretation of job work under relevant notifications, specifically Notification No. 214/86 and Notification No. 34/2001. It was concluded that M/s. Devi Metal Works acted as a job worker for M/s. Ganesh Industries, and duty liability was determined based on the installed capacity, leading to the decision to vacate the demand of duty on the circles.

Issue 4: Validity of penalties
Given the finding that M/s. Devi Metal Works did not manufacture the circles, the Tribunal held that penalties imposed on M/s. Devi Metal Works and the Proprietors of related firms were not justified and therefore vacated. The appeals filed by the Revenue seeking restoration of penalties were dismissed as they lost their basis in light of the Tribunal's decision.

This comprehensive analysis highlights the key issues addressed in the judgment, including the demand of duty, interpretation of job work provisions, and the validity of penalties imposed on the parties involved, ultimately leading to the Tribunal's decision to vacate the demand and penalties.