2001 (6) TMI 452 - AT - Central Excise

Summary

Issues involved: Interpretation of Notification 214/86 for duty exemption on goods cleared within the value of Rs. 30 lakhs under Notification 1/93; applicability of duty on final products cleared without payment; responsibility for paying excise duty on manufactured goods.

In the present case, Span Heat Transfer Equipments Manufacturers Pvt. Ltd. sought permission to send items for job work and received exemption under Notification 1/93 for clearances up to Rs. 30 lakhs. The department contended that goods cleared within this value limit were not eligible for the benefit of Notification 214/86, which exempts goods manufactured as job work related to the final product. The Assistant Collector demanded duty for the period from February to April 1994, leading to an appeal to the Commissioner (Appeals) who relied on legal precedents to allow the manufacturer's appeal against the duty demand.

Another notice was issued to Span for duty on clearances made between April 1990 and December 1993, invoking the extended period under Section 11A(1) of the Act. The Commissioner confirmed the duty proposal and imposed a penalty, leading to an appeal by Span. The counsel for Span acknowledged that the Commissioner's interpretation of Notification 214/86 could not be upheld based on legal decisions, arguing that duty, if applicable, should fall on the job worker, not the manufacturer.

Notification 214/86 imposes a condition that the supplier of raw material ensures the manufactured goods are used in or in relation to the final products, with the responsibility to pay excise duty if this condition is not met. The Tribunal's decision in Desh Rolling Mills clarified that duty is typically paid by the manufacturer (job worker) and not the supplier of raw material. Consequently, it was determined that the duty was not payable by Span. The order of the Commissioner (Appeals) was set aside, the department's appeal was allowed, and the demand for duty from Span was denied. Appeal E/2113/96 was allowed, and the impugned order was set aside, with consequential relief to be granted in accordance with the law.