2001 (7) TMI 534 - AT - Central Excise

Summary

Issues:
1. Duty demand as short-levy under the Central Excise Act.
2. Imposition of penalty under Rule 173Q of C.E. Rules, 1944.
3. Whether the appellants are the manufacturers or the suppliers are the manufacturers.
4. Contradictory orders by the Commissioner on the aspect of limitation.
5. Consideration of the appellants' bona fide belief regarding duty payment.

Detailed Analysis:
1. The appeal stemmed from an Order-in-Original confirming duty demand as short-levy and imposing a penalty under the Central Excise Act. The Commissioner invoked a larger period due to the fabrication and assembly of incomplete winding machines by the appellants, resulting in new marketable goods. Citing precedents, the Commissioner held the appellants liable for duty payment and penalty, leading to the appeal challenging these determinations.

2. The appellants argued that the supplier, not them, was the manufacturer as per the contract terms. They contended that the fabrication work was outsourced, and they merely assembled the parts. The appellants raised new legal grounds regarding the manufacturing process, emphasizing that the Commissioner should have considered their plea based on the supplier's role and the contractual obligations.

3. The Commissioner's order was challenged on the grounds of inconsistency, as a previous order by the same Commissioner for a different unit of the appellants had acknowledged a bona fide belief regarding duty payment. The appellants asserted that this inconsistency in findings on limitation and duty payment should have been considered in the impugned order, leading to a request for a reevaluation of the decision.

4. The respondent opposed the appellants' arguments, highlighting that the assembly work was carried out by the appellants, not the supplier, as evidenced in the Commissioner's findings. The respondent emphasized that the Commissioner's previous orders for other units should not bind the current proceedings, and the larger period invocation was justified due to the appellants' failure to disclose the assembly activities.

5. After considering the submissions, the Tribunal found merit in the appellants' contentions regarding the manufacturer's identity and the Commissioner's inconsistent findings on limitation and duty payment beliefs. The Tribunal directed a remand to the original authority for a fresh assessment on the manufacturing aspect, the party responsible for manufacturing, the limitation issue, and the appellants' bona fide belief, ensuring a comprehensive review and allowing the appellants a full opportunity to present their case.

In conclusion, the Tribunal allowed the appeal by remanding the case to the Commissioner of Central Excise, Madurai for a de novo consideration of the issues raised by the appellants, including the manufacturing aspect, limitation, and the findings from previous orders, while granting the appellants a fair chance to defend their position.