1996 (10) TMI 324 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand under Rule 9(1) and Rule 57-I of Central Excise Rules, 1944.
2. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.
3. Applicability of Modvat credit on copper and silicon used in intermediate product by job-worker.
4. Validity of allowing job-worker to retain pure aluminium ingots in lieu of copper, silicon, and job work charges.
5. Time-barred show cause notice and applicability of extended period.

Confirmation of Demand and Imposition of Penalty:
The appellant filed an appeal against an order confirming a demand of Rs. 36,378.35 under Rule 9(1) and Rule 57-I of Central Excise Rules, 1944. The Commissioner also imposed a penalty of Rs. 2,000 under Rule 173Q. The appellant, engaged in manufacturing aluminium casting, sent pure aluminium ingots to a job-worker for conversion into alloy ingots. The Department found that the job-worker retained a portion of the ingots for the cost of copper and silicon used. The Commissioner upheld the demand and penalty, stating that the appellant failed to provide evidence of duty payment on copper used in the intermediate product, and the job-worker's retention of inputs was not in compliance with rules.

Applicability of Modvat Credit:
The appellant argued for the benefit of Modvat credit on copper and silicon used by the job-worker in the intermediate product. The Department contended that allowing the job-worker to retain aluminium in lieu of copper and silicon was impermissible under the Central Excise Rules, 1944. The Commissioner agreed with the Department, emphasizing the lack of evidence of duty payment on copper in the intermediate product and the absence of provisions for availing credit for materials used by the job-worker. The Commissioner dismissed the appellant's accountal of goods despatched and received under Rule 57F(2) as improper.

Time-Barred Show Cause Notice and Extended Period:
The appellant argued that the show cause notice was time-barred and the extended period was inapplicable due to alleged suppression of facts. The Commissioner rejected this argument, stating that the appellant did not inform the Department about the retention of inputs by the job-worker. The Commissioner emphasized that any arrangement between the principal manufacturer and job-worker regarding cost adjustments did not exempt them from returning the full quantity of goods as required by Rule 57F(2). The Commissioner upheld the decision, dismissing the appeal.

In conclusion, the appellate tribunal upheld the Commissioner's order confirming the demand, imposing the penalty, and rejecting the appellant's claims regarding Modvat credit, time-barred notice, and extended period. The appeal was dismissed.