2004 (6) TMI 187 - AT - Central Excise

Summary

Issues:
1. Duty payment on transformers received for repairs without compliance with Rule 173H(2)
2. Imposition of penalty under Rule 173Q(1) for non-compliance with Board's order on relaxation of time periods

Analysis:

Issue 1:
The appellants received 6 transformers for repairs in 1994 without accompanying duty payment documents as required by Rule 173H(2). The transformers were originally cleared in 1991. A show cause notice (SCN) was issued demanding duty payment of Rs. 24,300 for non-compliance with Rule 173H(2) and proposing a penalty. The lower authorities did not conclude that the repair process amounted to manufacture, and the duty demands were based solely on non-compliance with Rule 173H(2). As the transformers were only repaired and not manufactured, the levy under Section 3 of the Central Excise Act, 1944 was not applicable. Therefore, the duty demands were set aside.

Issue 2:
A penalty of Rs. 5,000 was imposed under Rule 173Q(1) for not complying with the Board's order dated 21-9-90, which allowed for general permission in certain cases, including the repair of goods like transformers. The lower authorities failed to consider this Board order when imposing penalties for not meeting prescribed time limits. Since the Board's order on relaxation of time periods was not followed, the penalty was unjustified and set aside. The appeal was allowed, and the impugned orders were set aside accordingly.