1993 (11) TMI 140 - Commissioner - Central Excise

Summary

Issues:
1. Whether the demand of Central Excise duty and penalty imposed on the appellant is sustainable in law.
2. Whether the imposition of penalty for a second time is justified.
3. Whether the demand for duty on the appellant is valid based on Rule 173H and subsequent amendments.

Analysis:

Issue 1:
The appeal pertains to the confirmation of demand and penalty by the Assistant Collector on the grounds that duty-paid goods were brought into the factory after one year of initial removal and cleared without payment of duty. The appellant, engaged in the manufacture of Wires and Cables, received back certain goods for testing under Rule 173H. The Assistant Collector imposed a penalty of Rs. 1000/- and later issued a show cause notice for recovery of duty. The appellant contested the demand stating that the duty was not justified as no manufacturing process was undertaken. The Commissioner considered the submissions and held that the order of demand and penalty was not sustainable in law.

Issue 2:
The appellant argued that the imposition of penalty for a second time was unjustified. The Commissioner referred to a previous Tribunal case and concluded that while treating the duty aspect and penalty aspect separately is permissible, imposing a penalty for the same offense twice is not valid. Therefore, the Commissioner set aside the penalty imposed for a second time, in line with legal precedent.

Issue 3:
Regarding the demand for duty based on Rule 173H and subsequent amendments, the Commissioner analyzed the applicability of the proviso clause introduced in the rule. The rule specified a one-year period for bringing goods back into the factory for certain processes. However, the goods in question were brought back only for testing purposes, not covered by the proviso clause. The Commissioner further examined the amendments to Rule 173H and concluded that the demand for duty could not be sustained as testing did not amount to a manufacturing process. The Commissioner also referenced relevant case laws supporting the appellant's position. Consequently, the Commissioner allowed the appeal and set aside the impugned order on both counts.

This detailed analysis of the judgment highlights the legal intricacies involved in the case and the Commissioner's thorough examination of the issues raised by the appellant.