1996 (7) TMI 203 - AT - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Assistant Collector in confirming duty demands.
2. Applicability of Rule 57F(2) and Rule 57F(4) of the Central Excise Rules to the removal of brass scrap.
3. Time-barred nature of the duty demand.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assistant Collector:

The appellants challenged the jurisdiction of the Assistant Collector, arguing that he exceeded the monetary limit of Rs. 50,000/- set by the Ministry of Finance Circular 19/92-CX.6, dated 18-12-1992. The Tribunal noted the Supreme Court's principle in Kiran Singh v. Chaman Paswan, stating, "A decree passed by a Court without jurisdiction is a nullity." However, the Tribunal found that the Assistant Collector had not exceeded his statutory jurisdiction under Section 11A of the Central Excises & Salt Act, 1944, as the duty demand did not involve fraud, collusion, or suppression. The Tribunal concluded that the Assistant Collector's exceeding the monetary limit was an administrative irregularity, not a statutory one, and overruled the preliminary objection regarding jurisdiction.

2. Applicability of Rule 57F(2) and Rule 57F(4) of the Central Excise Rules:

The appellants contended that their removal of brass scrap to job workers was permissible under Rule 57F(2), as they had obtained necessary permission from the Assistant Collector. The Tribunal examined the relevant rules and previous decisions, noting that Rule 57F(2) allowed removal of inputs or partially processed inputs without payment of duty for further processing. However, waste and scrap arising during manufacture were governed by Rule 57F(4), which required payment of duty unless exempted by the Central Government.

The Tribunal referenced previous decisions, including Nucon Industries Pvt. Ltd. and Alco Wire Products Pvt. Ltd., which held that waste and scrap must suffer duty before being cleared. The Tribunal also considered contrary decisions by the West Regional Bench, which allowed removal of scrap under Rule 57F(2). Ultimately, the Tribunal concluded that the appellants' brass scrap was subject to duty under Rule 57F(4) and that the permission granted under Rule 57F(2) did not exempt them from this duty.

3. Time-barred nature of the duty demand:

The appellants argued that the first show cause notice dated 6-2-1989 was time-barred for the period beyond six months prior to that date. The Tribunal agreed, noting that the notice was indeed time-barred for the amount of duty relating to a period beyond six months. Consequently, the Tribunal excluded the time-barred portion of the demand from the notice dated 6-2-1989.

Conclusion:

The Tribunal dismissed the appeals, except for the portion of the duty demand that was time-barred. They emphasized that the duty paid or deposited would be admissible for payment of duty on the appellants' final products as per their declaration filed under Rule 57G. The Tribunal also suggested that the government consider suitable relaxation for cases involving the removal of waste without payment of duty, as had been done for aluminum scrap in the past.