Customs, Excise and Gold Tribunal - Calcutta
Non-Ferrous Industries vs Cce on 21 March, 2002
Equivalent citations: 2002(81)ECC750
ORDER Archana Wadhwa, Member (J)
1. The demand of duty of Rs. 2,06,095.00 (rupees two lakh six thousand ninety five) has been confirmed against the appellants and penalty of Rs. 77,000 (rupees seventy seven thousand) has been imposed on the ground that the appellants have manufactured aluminium castings out of the aluminium ingots sent to them by M/s. Non-Ferrous Castings Pvt. Ltd. and have cleared the same without payment of duty. It is an admitted position that the raw material was sent to the appellants under the private challans of the sender and after conversion, the aluminium castings were sent back to the sender of raw material by the appellant under their provide challans. As such by holding the appellant as manufacturer of the castings, the demand has been confirmed against them.
2. The appellants have strongly contended that the aluminium ingots were sent by their supplier and they have simply undertaken the job work by converting the same into aluminium castings. The same have been duly returned by them to the supplier of the inputs, who has utilised the same in the manufacture of their final product which has been cleared on payment of duty. As such they submit that the entire operation is covered under the provisions of Rule 57F(3) and the only lapse on the part of the sender of the goods and on their part is that the movement of the raw material and the castings was not under the challans issued under rule 57F (3). On the other hand, the Revenue has contended that the provisions of Rule 57F(3) requires the principal manufacturer and the job-worker to follow a certain procedures, which has not been followed in the instant case. As such the appellants are not entitled to the benefit of the said rule.
3. Shri U.P. Moitra. ld. consultant appearing for the appellants has relied upon certain judgments of the Tribunal in the case of Hindustan Lever Ltd. v. CCE, Bhopal holding that goods not sent under challan prescribed under trade notice issued in pursuance of Central Excise Rules, but under private documents which contained all the particulars prescribed under the challans cannot be denied the benefit of the modvat credit. He has also referred to another decision of the Tribunal in the case of Mirza Tanners v. CCE, Kanpur laying down that where the appellant had followed the procedure set out under rule 173N of Central Excise Rules, 1944 instead of following procedure under Notification. No. 214/86 benefit of notification cannot be denied to them.
4.I have considered the submissions made from both the sides and have gone through the impugned order. The Commissioner (Appeals) in his order has observed as under:--
According to then Rule 57F(3), the principal manufacturer and job worker required to comply with certain statutory requirements viz, intimation to jurisdictional Asst. Collector before removing such inputs/semi-processed goods for further manufacture; issuance of challans in Annexure 84 for movement of inputs/partially process goods and its subsequent return to the parent factory and maintenance of accounts of removal and receipts of the same in Annexures 86 and 87 as prescribed in part 5 of CE Manual, 1994-95. In the instant case, it is apparent that the impugned goods do not relate to any primary manufacturer because the appellant has failed to produce any of these statutory documents. In the absence of those statutory documents, therefore, the lower authority has rightly concluded that the appellant is the principle manufacturer of the impugned goods and attempted to cover the illicit manufacturing activity by taking shelter of Rule 57F(3).
5. It is seen that the raw material sender was also doing job work on behalf of some other parties and were receiving the material under the provisions of Rule 57F(3). As such it can be safely concluded that the raw material sender was very well aware of the procedure under Rule 57F(3). It is also noticed that some of the material received by the raw material sender was not converted into the castings themselves, but was further sent to the appellant under their private challans, in which case the provisions of Rule 57F(3) would not apply inasmuch as the same apply to the principle manufacturer who intends to send the inputs to a job-worker for conversion of the same to some intermediate products. The situation in both the relied upon cases by the appellant was different inasmuch as in one case the dispute related to availment of the benefit of modvat credit in respect of the inputs sent to the job-worker and received back by the principal manufacturer and in the other case the appellants were admittedly following the procedure under rule 173N and the documents issued under that rule were held to be sufficient compliance for the purposes of Notification No. 214/86. As rightly observed by Commissioner (Appeals), the provisions of Rule 57F(3) required a detailed procedure to be followed by the sender of the raw material as also by the job-worker. Such procedure cannot be held of a technical nature. The larger Bench of the Tribunal in the case of Balmer Lawrie & Co. Ltd. v. CCE, Kanpur RLT LB CEGAT 1403, while interpreting the provisions of rule 57G have observed that the modvat provisions laying down a procedure to be followed cannot be held to be mere technicalities. In the present matter it is not a case where a minor procedural lapse has taken place. Admittedly the raw material sender has not filed any declaration with the Central Excise Officers having jurisdiction over the appellants' factory, has not maintained any records and has not issued 57F(3) challans. Similarly the appellant has also not observed any of the requisite procedures required to be followed in terms of the provisions of Rule 57F(3) It is also on record that the appellants are sending their raw material to other job-worker, for which they hold a requisite permission from their jurisdictional Central Excise authorities and are following the due procedure. As such it can be safely concluded that the appellants were also well aware of the procedure of Rule 57F(3). The appellants now cannot take a plea that they have not followed the procedure by mistake. The requirement to follow the procedure under the said rule is with a purpose to enable the Central Excise authorities to keep a check on the movement of the goods from the raw material supplier to the job-workers' factory and to supervise the entire operation. If that is not done, the subsequent stand of the appellants that if they would have done so, no duty liability would have evolved upon them cannot come to their rescue inasmuch as at a later stage it becomes difficult for the Revenue to verify the genuineness of the claim of the appellant that the goods received back by the principle manufacturer have been utilised by them in further manufacture of their final product, which has been cleared on payment of duty. In view of the foregoing I find no justification in interfering in the impugned order. The appeal is accordingly rejected.