2004 (5) TMI 193 - AT - Central Excise

Summary

Issues: Confirmation of total duty demand and penalty against the manufacturers of electric motors, switch gear items, switch board items; demand on inputs cleared; demand on sorting and loading charges of scrap; demand on capital goods (tools) consumed captively in the manufacture of exempted products.

Confirmation of total duty demand and penalty on inputs cleared:
The demand of Rs. 5,55,483/- was confirmed on inputs cleared as such, requiring the reversal of duty equal to Modvat credit taken. The Tribunal upheld this demand based on the decision in the case of C.C.E., Vadodara v. Asia Brown Boveri Limited. However, the penalty imposed under Rule 57-I(4) was set aside as the credit was not taken wrongly due to fraud, wilful misstatement, collusion, or contravention of any provisions with intent to evade duty. The duty was paid before any written demand, so the provisions of Rule 57-I(2) were not attracted.

Demand on sorting and loading charges of scrap:
A demand of Rs. 86,896/- was confirmed by including sorting and loading charges of scrap in the assessable value under Section 4 of the Central Excise Act, 1944. The expenses incurred before the goods left the factory gate were rightly included, even though borne by buyers. The appellants' submission that sorting and loading were not done by buyers/customers on their behalf was rejected due to lack of evidence. The penalty under Section 11AC was set aside as there was no finding of suppression or misstatement leading to non-payment of duty.

Demand on capital goods consumed captively:
A demand of Rs. 8,263/- was confirmed on capital goods (tools) consumed captively in the manufacture of exempted products under Rule 57U(2) of the Central Excise Rules, 1944. The benefit of exemption under Notification 67/95 was denied as the tools were consumed in the manufacture of exempted products. However, the Tribunal set aside this demand and the penalty of equal amount after interpreting the exemption notification to not exclude capital goods used in the manufacture of final products exempt from duty.

In conclusion, the Tribunal upheld the demands of Rs. 5,55,483/- and Rs. 88,896/-, set aside the demand of Rs. 8,263/-, and also waived the liability to interest and penalties. The appeal was partly allowed, providing relief to the manufacturers on certain demands and penalties.