2004 (6) TMI 103 - AT - Central Excise

Summary

Issues:
1. Duty demand on cars brought back for repair/re-making.
2. Duty demand on cars cleared for export but not exported.
3. Duty demand on cars cleared for domestic sale and returned for repair/re-making.
4. Denial of benefit under Rule 49 for damaged vehicles.

Analysis:
1. The judgment involves a duty demand of over Rs. 12.7 crores on cars brought back to the factory for repair/re-making. The duty demands were confirmed for cars cleared for export but not exported, leading to the appellants being liable to pay duty. The appellants argued that the demand contradicted Rule 173M of the Central Excise Rules. Similarly, for cars cleared for domestic sale and returned for repair/re-making, the appellants claimed coverage under Rule 173L, which the Commissioner did not consider fully, resulting in a significant duty demand.

2. A portion of the demand, about Rs. 92 lakhs, pertained to 169 vehicles damaged before clearance from the factory. The appellants contended that they were denied benefits under Rule 49 as they had not applied for permission to carry out repairs. However, the appellants argued that Rule 49 did not necessitate such an application, leading to a dispute over the duty demand.

3. The Tribunal had previously ruled in favor of the appellants' entitlement to benefits under Rule 173L for goods returned for repair/re-making. The Commissioner's failure to consider this ruling in the present case resulted in a duty demand of Rs. 10.5 crores. The Tribunal disagreed with the Commissioner's decision to separate the claims under Rules 173L and 173H, emphasizing the need for a consolidated disposal to determine the net amount due from the assessee.

4. The judgment also addressed the duty demand on cars originally cleared for export but brought back, which was set aside due to non-compliance with Rule 173M. Similarly, the duty demand on 169 damaged cars was deemed unwarranted under Rule 49, as the rule allows manufacturers to undertake necessary processes to make goods marketable without additional duty charges.

In conclusion, the Tribunal set aside the duty demands on cars brought back for repair/re-making and damaged vehicles, while remitting the demand for cars cleared for domestic sale and returned for repair/re-making back to the original authority for a fresh decision considering the appellants' claim under Rule 173L.