2000 (5) TMI 117 - AT - Central Excise

Summary

Issues Involved:
1. Availability of exemption under Notification No. 144/88-C.E.
2. Applicability of excise duty on goods manufactured on a job basis.
3. Marketability of products manufactured on a job work basis.
4. Admissibility of additional evidence at the appellate stage.
5. Determination of the nature of work (manufacture vs. repair).
6. Valuation of materials supplied for job work.
7. Calculation of assessable value and imposition of penalty.

Detailed Analysis:

1. Availability of Exemption under Notification No. 144/88-C.E.:
The main issue was whether the exemption under Notification No. 144/88-C.E. was available to the goods manufactured by the appellants. The Collector held that the benefit was not available as the goods were supplied to M/s. BEML and not directly to Ordnance Factory, Medak, as required by the notification. The Tribunal agreed with the Collector, stating that the notification was specific about the manufacturer and the recipient. The goods fabricated by the appellants were not covered by the notification since they were not supplied directly to the Ordnance Factory, Medak.

2. Applicability of Excise Duty on Goods Manufactured on a Job Basis:
The Collector confirmed the demand for excise duty and imposed a penalty, holding that the appellants did not maintain proper records and cleared goods without payment of duty. The Tribunal upheld this finding, confirming that the appellants were liable to pay excise duty on goods manufactured on a job basis.

3. Marketability of Products Manufactured on a Job Work Basis:
The appellants filed a Miscellaneous Application to raise a new plea regarding the marketability of the products. The Tribunal rejected this application, agreeing with the learned DR that it was not open to the appellants to raise a new plea at the appellate stage, which could have been made during the earlier stage of adjudication.

4. Admissibility of Additional Evidence at the Appellate Stage:
The Tribunal held that additional evidence could be admitted only if certain conditions were met, such as the lower authorities refusing to admit evidence that should have been admitted. In this case, the Tribunal found that the appellants were trying to introduce new evidence after the proceedings had commenced, which was not permissible.

5. Determination of the Nature of Work (Manufacture vs. Repair):
The Tribunal found that the work undertaken by the appellants for M/s. BEML, KGF, was repair work and not manufacturing. The work involved filling blow holes in the casing with aluminum material by welding, which was considered repair work. Therefore, the value of such work was not to be taken into consideration for computing the aggregate value of clearance.

6. Valuation of Materials Supplied for Job Work:
The Tribunal addressed the valuation of materials supplied by various parties for job work. For M/s. Machine Tool Builders, the Tribunal accepted the value of raw materials as furnished by the supplier. However, for M/s. Arvind Foundry, the Tribunal upheld the Collector's decision to adopt the market value of the materials, as the cost provided by the supplier was approximate and not accurate.

7. Calculation of Assessable Value and Imposition of Penalty:
The Tribunal directed that the price be considered as cum-duty price, and the assessable value be computed accordingly. The penalty imposed on the appellants was reduced from Rs. 30,000/- to Rs. 5,000/-, considering the totality of the facts and circumstances of the case.

Conclusion:
The Tribunal held that the benefit of Notification Nos. 144/88 and 7/77 was not available for the goods made by the appellants for M/s. BEML, Rail Coach Division, and Naval Science and Technological Laboratory. The findings of the Collector regarding other suppliers were confirmed. No duty liability arose for job work done for M/s. BEML, KGF. The duty for M/s. Machine Tool Builders was to be recalculated based on the cost of raw materials furnished by them. The cost of raw materials for ejector casing supplied by M/s. BEML, Rail Coach Division, was also to be recalculated. The appeal was disposed of in these terms, with a reduction in the penalty to Rs. 5,000/-.