2015 (10) TMI 1698 - AT - Central Excise

Demand of excise duty - goods cleared under Rule 173H and Rule 57F (4) - Instead of repairing or reprocessing, appellants have cleared the excisable goods by using the inputs which were available in from their stock - held that - Appellants have set up integrated aluminium plant where they have the facility of manufacturing of aluminium products from primary ore stage to the finished goods viz. aluminium Ingots, Rods, Sheets. They also carry out re-processing or remelting of the scrap and this is only a miniscule activity and done only when their finished goods are returned by the suppliers. I also find that the finished goods manufactured out of returned goods were subsequently cleared on payment of duty as normal clearance. D3 declaration intimation was duly filed upon the officers visited the unit on 10.2.2000 as recorded in para-2 of the SCN. It is found that from the production records that appellants have cleared the goods under rule 173H from the fresh stock. SCN should have been issued within 6 months whereas the department issued SCN on 10.2.2004. Hence there is no suppression of facts with intention to evade payment of duty. Therefore, demand raised on the goods cleared under Rule173H is hit by limitation and liable to be set aside and equal penalty imposed on the appellant is also liable to be set aside. - appellants are liable for under penalty under Rule 173Q as they have violated the procedure. Therefore, appellants are liable for penalty. In view of the foregoing discussion, demand and Section 11AC penalty is set aside - Decided partly in favour of assessee.

Summary

Issues involved:
1. Change of cause title for the appellant.
2. Demand of excise duty on goods cleared under Rule 173H and Rule 57F (4) of Central Excise Rules, 1944.
3. Procedural lapse and duty demand.
4. Limitation period applicability.
5. Penalty under Rule 173Q.

Analysis:
1. The appellant filed two MISC petitions seeking to change the cause title from "The Madras Aluminum Company Ltd." to Sesa Sterlite Ltd. and then to Vedanta Ltd. The change was allowed based on the certificates produced, directing the registry to amend the cause title accordingly.

2. The main issue revolved around the demand of excise duty on goods cleared under Rule 173H and Rule 57F (4). The appellant received raw materials for reprocessing but cleared excisable goods using stock inputs, violating the rules. The adjudicating authority confirmed the duty demand and imposed a penalty, which was upheld by the Commissioner (Appeals).

3. The appellant argued that the goods received did not require reprocessing as they were used directly in manufacturing final products. The appellant contended that duty cannot be demanded twice as the reprocessed goods were cleared after payment of duty. The lapse was procedural, and the limitation period for issuing the notice had lapsed, indicating no intention to evade payment.

4. The limitation issue was crucial, with the appellant claiming that the notice was issued after the prescribed period, indicating no suppression of facts. The demand raised under Rule 173H was considered time-barred and set aside, while the penalty under Rule 173Q was upheld for violating the procedure.

5. Despite setting aside the demand and penalty under Section 11AC, the appellant was held liable for penalty under Rule 173Q for the procedural violation. The overall appeal was allowed with the imposition of a penalty of &8377; 10,000 under Rule 173Q.