2019 (7) TMI 951 - AT - Central Excise

Job-work - failure on the part of principal to pay the duty - manufacture of railway wagons classifiable under Central Excise Tariff Heading 8606 - Benefit of N/N. 10/97-CE dated 1 March 1997 - HTC wagons were cleared by the principal manufacture for Research and Development Establishment of Indian Defence, availing the exemption Notification No. 10/97-CE dated 1 March 1997 - HELD THAT - The appellant have manufactured HTC wagons for M/s Titagarh wagons Ltd. on job work basis availing the exemption benefit under N/N. 214/86-CE dated 25 March 1986. It is also a fact that the appellants have cleared two HTC wagons to M/s TWL under their invoice No. 267060 dated 29 March 2011. These clearances have also been affected at the nil rate of duty availing the benefit of N/N. 214/86-CE. As per the scheme things under the N/N. 214/86-CE, the job worker is entitled to clear the goods without payment of duty to the principal manufacturer and it is the responsibilities of the principal manufacturer to pay duty on such goods, and, therefore, no wrong has been done by the appellant upto this particular point. It is a matter of record that appellant have not availed the benefit of N/N. 10/97-CE, which was availed by the principal manufacturer and, therefore, the demand of duty for violation of the terms of N/N. 10/97-CE cannot be raised against the appellant - the demand of Central Excise Duty is without any merit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged wrongful availing of exemption benefits under Notification No. 10/97-CE and Cenvat Credit Rules by the appellant.
2. Allegation of willful suppression of facts and intention to evade central excise duty by the Department.
3. Demand of central excise duty, interest, and penalty under Section 11A (4), 11AA, and 11AC of the Central Excise Act, 1944.
4. Adjudication of the matter by the Adjudicating Authority and rejection of appeal by the Commissioner (Appeals).
5. Arguments presented by the appellant against the charges in the show cause notice.
6. Examination of the facts by the Tribunal and determination of the legality of the demand of central excise duty.

Analysis:
The appellant, engaged in manufacturing railway wagons, received an order from M/s Titagarh Wagons Ltd. for manufacturing Hood Transfer Carrier (HTC) wagons on a job work basis under Notification No. 214/86-CE. The Department alleged wrongful availing of benefits under Notification No. 10/97-CE and Cenvat Credit Rules by the appellant, leading to a show cause notice demanding central excise duty, interest, and penalty. The Adjudicating Authority confirmed the charges, which the Commissioner (Appeals) upheld, prompting the appellant to appeal. The appellant contended that they correctly availed benefits under Notification No. 214/86-CE for clearing HTC wagons manufactured on a job work basis for M/s Titagarh Wagons Ltd. without invoking Notification No. 10/97-CE. The Tribunal noted the appellant's compliance with the exemption conditions and found no violation by the appellant, as the principal manufacturer availed the benefits under Notification No. 10/97-CE. Citing precedents, the Tribunal ruled in favor of the appellant, setting aside the impugned order-in-appeal, and allowed the appeal, finding the demand of central excise duty legally unsustainable.