2017 (12) TMI 376 - AT - Central Excise

Liability of duty - intermediate goods - Revenue held that PVC compound blend arising as a intermediate product is not consumed captively and thus duty liability will arise on its clearance - Held that - the demands was made on presumption and inference without any categorical evidence to support the claim of the Revenue that the PVC compound manufactured by Unit No.2 was cleared to Unit No.1 - manufacture of footwear at Unit No.2 itself could not be discounted as no contrary evidence was brought forth by the Revenue - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Duty liability on PVC compound manufactured and cleared between two manufacturing units in Naraina Industrial Area, New Delhi.

Analysis:
The case involved two appeals by the Revenue against the order of the Commissioner (Appeals) regarding duty liability on PVC compound manufactured and cleared between two manufacturing units in Naraina Industrial Area, New Delhi. The main issue was whether the PVC compound, considered an intermediate product, was consumed captively or not, leading to duty liability upon its clearance. The Revenue alleged that Unit No.1 procured raw material, which was used by Unit No.2 to manufacture PVC compound, cleared back to Unit No.1 for shoe manufacturing. The Original Authority confirmed duty liability and penalties, but the Commissioner (Appeals) set aside the demand proceedings, ruling in favor of the respondents.

The Revenue contended that Unit No.2's intimation to the Sales Tax Department could not be relied upon, and statements indicated its involvement in PVC compound manufacturing. They argued that there was sufficient evidence to deny the exemption for PVC compound and criticized the impugned order for contradicting the evidence. On the other hand, the respondents' counsel argued that there was no evidence of law violation by Unit No.2, highlighting its registration with Sales Tax Authorities. They also invoked Notification No. 83/94-CE, stating that even if raw materials were supplied by Unit No.1 and the compound was made by Unit No.2, duty demand did not stand valid.

Upon review, the Tribunal found that the demands were based on presumption without concrete evidence supporting the Revenue's claim of PVC compound transfer between the units. The Commissioner (Appeals) noted the absence of evidence discounting footwear manufacturing at Unit No.2. The Tribunal upheld the impugned order, emphasizing the lack of dispute on the findings and the applicability of Notification 83/1994-CE. Consequently, the appeals by the Revenue were dismissed, affirming the Commissioner (Appeals)'s decision in favor of the respondents.