1997 (2) TMI 236 - AT - Central Excise

Summary

Issues involved: Appeal against order of Collector of Central Excise, Bangalore regarding evasion of duty on forgings manufactured on job work basis, invocation of longer period of limitation, correct assessable value calculation, penalty reduction, and confiscation of plant and machinery.

Evasion of Duty on Job Work Basis:
The appellants manufactured goods on job work basis without paying duty, claiming benefit under Notification 214/86. However, they did not follow the procedure as required under the notification, leading to duty evasion. The Tribunal found that the appellants operated outside the Modvat Scheme parameters, indicating an intention to evade duty. The approval obtained for duty-free clearance under Notification 214/86 was deemed invalid due to non-compliance with Modvat Scheme rules.

Invocation of Longer Period of Limitation:
The appellants argued that the demand was time-barred, citing their submission of invoices and RT 12 returns to inform the Department about operations on job work basis. However, the Tribunal held that mere submission of invoices was insufficient, and the longer period of limitation was rightly invoked due to lack of bonafides and suppression of facts by the appellants.

Assessable Value Calculation:
The Tribunal noted discrepancies in the assessable value calculation, specifically the addition of a notional profit margin of 10%. The matter was remanded for re-examination to determine the correct basis for adding the notional profit in the context of goods manufactured on job work basis.

Penalty Reduction:
Considering the appellants' status as manufacturers on job work basis and the duty amount involved, the penalty was reduced to Rs. 10,000 to meet the ends of justice.

Confiscation of Plant and Machinery:
While the confiscation of plant and machinery was deemed legally sustainable, the redemption fine was reduced to Rs. 5,000 considering the circumstances and duty amount involved. The appeal was rejected with modifications as stated above.