1997 (1) TMI 350 - AT - Central Excise

Summary

Issues: Duty liability on excess raw-materials found, Modvat credit availed, applicability of Section 11A and Rule 9(2), manufacturer's liability, appeal against Assistant Commissioner's order.

Duty Liability on Excess Raw-Materials Found:
The case involved the appellants, engaged in manufacturing Alumina metal, finding an excess stock of Calcined Alumina during routine stock-check. The Assistant Commissioner imposed a duty demand on the excess material, alleging non-duty payment. The appellate authority upheld the decision. The main contention was whether the duty liability for the excess raw-materials should be on the appellants or the manufacturers of the inputs.

Modvat Credit Availed:
The appellants had not taken Modvat credit for the excess Alumina found in their stock. The absence of corresponding entries in the RG-23A Part-II Register raised questions regarding the duty liability on the excess material. The appellant's argument focused on the negligible percentage of excess material compared to the total inputs consumed and the lack of duty payment necessity.

Applicability of Section 11A and Rule 9(2):
The authorities relied on Section 11A of the Central Excises and Salt Act, 1944, along with Rule 9(2) of the Central Excise Rules, 1944, to demand duty from the appellants for the excess raw-materials found. The appellant's representative argued that the duty liability should fall on the manufacturers of the inputs, as per the provisions of Section 11A and Rule 9(2).

Manufacturer's Liability:
The Tribunal considered whether the duty liability for non-duty paid goods should be directed towards the manufacturers of the inputs rather than the receivers. The appellants were not the manufacturers of Calcined Alumina but had received it from another factory. The judgment emphasized that the Excise Authorities lacked the power to demand duty from the receiver of non-duty paid goods under Section 11A and Rule 9(2).

Appeal Against Assistant Commissioner's Order:
The Tribunal, after reviewing the submissions and orders of the lower authorities, found that the excess inputs were entered by the appellants in their records without availing Modvat credit. The judgment concluded that if duty was confirmed against the appellants, they would be entitled to Modvat credit under Rule 57E, as the inputs were used in their final product cleared with duty payment. Consequently, the impugned orders were set aside, and the appeal was allowed with any consequential relief.