2001 (2) TMI 362 - AT - Central Excise

Summary

Issues: Duty recovery on ethoxylate, Penalty for duty evasion

Analysis:
1. The appellant, a chemical manufacturer with two factories, sought permission to partially manufacture chemicals at one factory and complete the process at another. The primary raw material, ethylene oxide, was to be converted into ethoxylate and then anti static oil.

2. The factory at Silvasa did not receive ethylene oxide directly; instead, it was sent to the Panoli factory. The Commissioner proposed duty recovery on ethoxylate cleared from Panoli and penalties for duty evasion.

3. The Commissioner held that the manufacture at Panoli did not comply with Rule 57F(3) as ethylene oxide did not go from Silvasa to Panoli. The duty recovery and penalties were confirmed, leading to appeals by the company and its director.

4. The appellant's counsel argued that ethoxylate from Panoli was only sent to Silvasa, citing a previous Tribunal decision and the intimation filed with the department. The entries showing receipt of ethylene oxide at Silvasa were deemed unnecessary.

5. The department contended that ethoxylate was never received at Silvasa, supporting the Commissioner's decision. However, no substantial evidence was provided for this claim, and consistent statements indicated ethoxylate was sent only to Silvasa.

6. The Tribunal compared the case to a previous ruling involving direct importation of raw materials, emphasizing that the direct transfer to Panoli did not invalidate Rule 57F(3) eligibility. The payment to the supplier and the company's structure were deemed irrelevant.

7. The Tribunal found the appellant's situation similar to the previous case, with the only difference being the incorrect entry of raw material receipt. Despite the misconduct, the appellant was entitled to Rule 57F(3) benefits, and the Commissioner's order for duty recovery and penalties was deemed unjustifiable.

8. Both appeals were allowed, and the impugned order was set aside, indicating that the duty recovery, confiscation, and penalties were not upheld.