2002 (3) TMI 123 - AT - Central Excise

Summary

Issues:
1. Demand of duty on manufactured machines
2. Confiscation of machines and imposition of penalty
3. Application of Rules 209A and 210
4. Extended period of limitation for demanding duty
5. Justification for ordering confiscation of machines
6. Interpretation of Rule 173Q(1) regarding confiscation
7. Redemption fine and recovery of duty
8. Commissioner's attempt to recover duty indirectly

Analysis:

1. The case involved the demand of duty on two machines manufactured by Coromondal Steel Ltd., as per the contract with Western Coal Mines. The department issued notices to the parties involved, proposing penalties under Rules 209A and 210. Coromondal Steel Ltd. argued against being considered the manufacturer and claimed exemption under Notification 182/87. The Commissioner held that the machines emerged from manufacture by Coromondal Steel Ltd., but the extended period of limitation did not apply due to the department's awareness. The demands for duty were deemed time-barred.

2. The Commissioner found no grounds for imposing penalties on any party, including Coromondal Steel Ltd. and Western Coal Mines. However, he ordered the confiscation of the machines due to procedural infractions by Coromondal Steel Ltd., such as not applying for the required registration certificate. The goods were deemed liable to confiscation under Rule 173Q(1), with a redemption fine equal to the duty payable.

3. The Tribunal emphasized that in cases of procedural and technical infractions, penalties and confiscations are not warranted. Previous decisions like Lucknow Paper Distributors and Safari Industries had set aside confiscation orders in similar situations. The Tribunal found no intent to evade duty by Coromondal Steel Ltd., and thus, confiscation was deemed unjustified.

4. The Commissioner's attempt to indirectly recover duty through confiscation was questioned by the Tribunal. Despite the absence of mala fide intentions, the redemption fine was set equal to the demanded duty. The Tribunal noted the Commissioner's failure to recover duty from the manufacturer in time, indicating a fault on the part of the department. Considering these factors, the Tribunal allowed the appeals and set aside the confiscation order.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the order of confiscation based on the lack of intent to evade duty and the procedural nature of the infractions. The attempt to indirectly recover duty through redemption fine was deemed unjustified, considering the circumstances of the case.