2004 (11) TMI 157 - AT - Central Excise

Summary

Issues:
1. Differential central excise duty demand on processed fabrics.
2. Denial of deemed Modvat credit.
3. Imposition of penalties on the appellants.
4. Liability of job worker in case of misdeclaration by raw material supplier.
5. Correct valuation of grey fabrics.
6. Admissibility of new evidence at the appellate stage.
7. Confirmation of demand for deemed credit wrongly availed.
8. Compliance with Central Excise Rules.

Analysis:
1. The appellants were engaged in processing cotton and MMF on a job work basis and were asked to show cause for evading central excise duty on processed fabrics. The original authority confirmed the demand, denied deemed Modvat credit, and imposed penalties. The Commissioner (Appeals) upheld the decision, leading to the appeals by the company and its director for the period 1997-98.

2. The appellants argued that the duty demand was wrongly calculated, including ad hoc loading and not subtracting deemed credit. They contended that penalties should not be imposed on the job worker for the actions of raw material suppliers. The Revenue argued that the job worker cannot escape liability under Notification 27/92, and penalties were rightly imposed. The Tribunal's decision emphasized the job worker's duty to pay on correct valuation.

3. The Tribunal observed that the decision in favor of the appellants was set aside by the Supreme Court, reinforcing the job worker's liability for correct valuation. The department can investigate misdeclaration, and penalties can be levied if grey fabrics are undervalued. The Tribunal upheld the invocation of a larger period for such cases.

4. Regarding the assessable value of processed fabrics, the Commissioner rejected the appellant's claim for reduction as unsupported by evidence. The appellants' varying stances and lack of evidence led to the rejection of their claims. The Commissioner rightly refused to consider new evidence at the appellate stage.

5. The confirmation of demand for deemed credit was upheld as the appellants failed to substantiate their claim that it was already included in the total demand. The rejection was based on the short payment of central excise duty due to suppression of facts, as per relevant notification.

6. Ultimately, the appeals failed on all points, and the Tribunal rejected them, emphasizing compliance with Central Excise Rules. The judgment highlighted the importance of correct valuation, liability under notifications, and the need for substantiated claims in legal proceedings.