2007 (9) TMI 209 - AT - Central Excise

Replacement of goods after clearance on payment of duty - contention of the appellants that in terms of the contracts, they are bound to supply these replacements without charges as the original invoices has already included the value of these replacements, is rejected - no provision under law for payment of duty on goods which are to be supplied later - appellant have taken credit on inputs supplied to job worker but cleared the final good from job workers premises without demand confirmed

Summary

Issues:
- Appeal against Order-in-Appeal No. 65/2004 dated 19-4-2004 passed by the Commissioner of Customs & Central Excise (Appeals.), Guntur.
- Allegations against the manufacturers of batteries for duty non-payment on replacements and goods cleared by job workers.
- Confirmation of demand under Section 11A of the Central Excise Act, penalty under Section 11AC, interest under Section 11AB, and additional penalties under Central Excise Rules, 1944.
- Challenge to the original authority's order, upheld by the Commissioner (Appeals).
- Legal interpretation of duty payment on replacements and goods cleared by job workers.
- Upholding of penalties under various provisions of Central Excise Act/Rules,1944.

Analysis:

The case involves an appeal against an Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals.) regarding duty non-payment by manufacturers of batteries. The Revenue alleged that replacements for batteries and goods cleared by job workers were done without payment of duty. The original authority confirmed a demand under Section 11A of the Central Excise Act, imposed penalties under Section 11AC, demanded interest under Section 11AB, and levied additional penalties under Central Excise Rules, 1944. The Commissioner (Appeals) upheld this decision, leading to the appellants challenging it.

The appellants contended that replacements were supplied without duty as they were covered under the original system supply contracts. However, the original authority rejected this argument, stating that there is no provision for duty payment on goods supplied later. Regarding goods cleared by job workers, the appellants took modvat credit but cleared finished goods without duty payment, claiming the job worker as the real manufacturer. The Tribunal found these explanations unsatisfactory and upheld the impugned order, stating that the appellants are liable for penalties under Central Excise Act/Rules,1944.

In conclusion, the Tribunal dismissed the appeal, affirming the decision that duty non-payment on replacements and goods cleared by job workers was not justified. The finding of liability for penalties under various provisions of the Central Excise Act and Rules, 1944 was deemed legal and appropriate based on the circumstances presented in the case.