2004 (10) TMI 204 - AT - Central Excise

Job work - Exemption - Demand - Valuation (Central Excise) - Limitation - Suppression of facts - Confiscation and penalty

Summary

Issues:
1. Liability of excise duty on transformer oil used for repair.
2. Jurisdiction of demanding duty.
3. Assessment of assessable value for levying duty.
4. Time-barred demand of duty.
5. Imposition of penalty on the Appellant-company and Director.

Liability of excise duty on transformer oil used for repair:
The appeals were filed by the Appellant company and its Director against the demand of excise duty on transformer oil used for repairing old transformers. The Appellants argued that the duty should be recovered from the job worker, M/s. Apar Ltd., who actually manufactured the goods. However, the Tribunal held that as per the Notification exempting specified goods manufactured in a factory as job work, the liability to pay duty of excise is on the supplier of raw material, in this case, the Appellants. The Tribunal emphasized that once the goods are removed for home consumption after processing by the job worker, the duty liability falls on the Appellants.

Jurisdiction of demanding duty:
The Appellants contended that the officer demanding duty did not have jurisdiction as the job worker was the actual manufacturer. However, the Tribunal ruled that the officer having jurisdiction over the factory of the Appellants is entitled to demand duty in such cases. The Tribunal differentiated this case from a previous judgment, highlighting that the facts were distinct.

Assessment of assessable value for levying duty:
The Appellants argued that the assessable value should be based on the job worker's value, not theirs as traders. The Tribunal rejected this argument, stating that the Appellants, by using the transformer oil for repair, must pay duty as per the Notification conditions. The Tribunal upheld the Revenue's assessment of the value for duty calculation.

Time-barred demand of duty:
Regarding the time limit for demanding duty, the Appellants claimed the demand was time-barred. However, the Tribunal found that the Appellants failed to disclose the use of transformer oil without duty payment within the specified period. The Tribunal invoked the extended limitation period, ruling the demand was not time-barred.

Imposition of penalty on the Appellant-company and Director:
The Tribunal imposed a reduced penalty on the Appellant-company for using transformer oil without paying duty. Citing a Supreme Court decision, the Tribunal emphasized that penalty is mandatory in such cases. The penalty on the Director was set aside due to lack of specific charges against him regarding knowledge of the offense.

In conclusion, the appeal by the Appellant company was partly allowed, and the appeal by the Director was fully allowed.