1999 (10) TMI 226 - AT - Central Excise

Summary

Issues: Manufacturing facility existence, entitlement to Modvat facility, loss to revenue due to job workers not entitled to Modvat scheme.

Manufacturing Facility Existence: The case involved applicants who received Seamless Tubes from their parent factory, sent them to job workers, and brought back finished goods for clearance after paying duty. The show cause notice alleged the applicants had no manufacturing facility and wrongly claimed Modvat facility. The Commissioner found the applicants to be traders, disallowed Modvat credit, imposed a penalty, and confiscated the building. The applicants appealed against this decision.

Entitlement to Modvat Facility: The applicants argued that they followed proper procedures, and the Commissioner's observation that they were traders was incorrect. The Tribunal considered whether a manufacturer could be termed as such even if no physical manufacturing was done on their own account. It was noted that duty was paid on inputs and final products, indicating no apparent revenue loss. The Tribunal granted waiver of deposit pre-condition, penalty, and stayed recovery during the appeal, allowing the applicants to use the building under certain conditions.

Loss to Revenue Due to Job Workers: The Respondent contended that using job workers not entitled to the Modvat scheme could lead to revenue loss. While this argument may have merit in some cases, the Tribunal concluded that in the overall analysis, there might not be a loss. The Tribunal permitted the applicants to continue using the building with restrictions during the appeal process, ensuring no sale, lease, or disposal without prior permission from the Jurisdictional Commissioner.