2001 (8) TMI 415 - AT - Central Excise

Summary

Issues:
1. Liability of duty short levied on processed fabric.
2. Imposition of penalty under Rule 209A.
3. Invocation of extended period under Section 11A(1) of the Act.
4. Contradiction in the Commissioner's order regarding suppression of cost.
5. Examination of job charges and processing charges.
6. Responsibility of manufacturer in paying correct duty.
7. Decision on penalty imposition based on duty evasion.

Analysis:
1. The appeals challenged the order holding a manufacturer liable to pay duty short levied on processed fabric between April 1997 and May 1998, along with imposing a penalty under Rule 209A on the supplier of the grey fabrics. The extended period under Section 11A(1) was invoked due to alleged suppression of correct prices of the grey fabric. The Commissioner (Appeals) upheld the duty demand and penalty on both the manufacturer and supplier.

2. The Commissioner accepted the manufacturer's claim that the extended period was not applicable as there was no suppression of the cost of grey fabrics. However, he directed duty payment by the supplier and also held the job worker accountable. This led to a contradiction in the Commissioner's order regarding the suppression of cost and the invocation of the extended period.

3. In a previous order with similar contradictions, the matter was remanded for resolution. The Tribunal agreed that a similar course of action should be followed in this appeal. The Commissioner was directed to examine the actual costs, including transportation and other charges, to determine duty and penalty based on the submissions by the parties.

4. The Tribunal highlighted the responsibility of the manufacturer in ensuring the correct duty payment, emphasizing that blaming the processor for any discrepancies is not acceptable. The Commissioner was instructed to consider this factor and make a decision after hearing from the manufacturer.

5. The Tribunal allowed the appeals, setting aside the impugned order and directing the Commissioner (Appeals) to dispose of the appeals based on the findings and observations, ensuring compliance with the law. The decision on penalty imposition was to be made in consideration of the duty evasion found during the proceedings.