2000 (8) TMI 450 - AT - Central Excise

Summary

Issues:
Appeal against order passed by Commissioner (Appeals) regarding differential duty on forgings used in manufacturing crankshafts under different duty rates and exemptions.

Analysis:
The appellants, manufacturers of crankshafts, faced an issue concerning the eligibility of forgings used in manufacturing crankshafts cleared under NIL rate of duty for exemption under Notification No. 217/86. The Assistant Collector demanded differential duty for items cleared under NIL rate, leading to a dispute. The Commissioner (Appeals) disagreed with the appellants' pleas, confirming the Orders-in-Original. The Commissioner noted that forgings, as intermediate products, are subject to specific rules. He highlighted that forgings used in exempted crankshafts under Chapter X procedure are not entitled to the exemption under Notification No. 217/86, justifying the demands based on amended rules 9 and 49 of Central Excise Rules, 1944. The Commissioner emphasized the distinction between dutiable and exempted goods under Chapter X procedure, differing from previous decisions for consistency.

The appellants argued that forgings should not be dutiable until the final stage, asserting they are distinct finished goods with separate tax liability and marketability. They contended that forged parts of machinery, like crankshafts, attract specific duty rates, while finished crankshafts are subject to ad valorem duty. The forged parts, even if further processed, maintain their identity as finished intermediate goods requiring duty payment upon removal for captive consumption. The appellants sought to distinguish a judgment related to Rule 57C from their case, emphasizing the unique circumstances of their proceedings under the notification.

The Tribunal considered the arguments presented by both parties. The Tribunal found no error in the impugned order, affirming the Commissioner's decision to levy short duty. Referring to a judgment involving Kirloskar Oil Engines Ltd., the Tribunal upheld the decision, stating that the benefit of notification is not applicable to products cleared duty-free. The Tribunal highlighted the relevance of the Larger Bench's ruling on the clubbing of notification and Rule 57C, emphasizing that products cleared without duty are not eligible for notification benefits. Consequently, the Tribunal dismissed the appeals, confirming the impugned orders based on the principles established in previous judgments.

This detailed analysis of the judgment clarifies the issues surrounding the differential duty on forgings used in manufacturing crankshafts and the application of relevant notifications and rules, as interpreted by the Commissioner (Appeals) and the Appellate Tribunal.