Customs, Excise and Gold Tribunal - Mumbai
Jetex Carburattors Pvt. Ltd. vs Commissioner Of Central Excise, ... on 6 July, 2001
Equivalent citations: 2001(138)ELT1100(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. The appellant, Jetex Carburettors Pvt Ltd, the manufacturer of carburettors, which are made for automobile engines. These are made of zinc alloy with a small quantity of aluminium. The order of the Commissioner(Appeals), on appal by this manufacturer, demands duty on two counts, and imposed a penalty on it.
2. The first issue is the liability to confiscation of the zinc or scrap of zinc alloy that the appellant obtained in its factory, during the process of making the carburettors from the allows. The quantity of scrap, valued at Rs 2.73 lakhs approx which the officers found in the appellant's factory has been confiscated on the ground that the accounts relating to its manufacture had not been maintained. The representative of the appellant does not deny the failure to a maintain the account. He says that duty had been paid on it and therefore the contravention was not very significant. The Commissioner has recognised the fact that such failure to maintain the account was not wilful by imposing a nominal fine of Rs 1000/-. This fine does not call for any interference.
3. During the visit, the officers that found a shortage of 4532 kilogram of zinc and excess of 4713.6 kilogram of zinc alloy. The Commissioner has ordered confiscation of the alloy found in excess. The contention here is that the appellant had removed the zinc on the previous day in order to alloy it with the aluminium; and calculation were attempted by the representative of the appellant to show that, after taking into account the quantity of aluminium used, the excess comes to only 49 kilogram approx which is the quantity of zinc adhering to the crucible. The explanation on the face of it is unacceptable. If any alloy left behind the crucible, it should reduce the excess and cannot be used as an explanation for the excess. The statement of H.D. Kothari, Commercial Director of the appellant, does not attempt to say any such thing. The show cause notice proceeds on the assumption that alloying zinc with another metal, a new commodity had come into existence, which was required to be entered in the statutory records. The representative of the appellant does not dispute that this zinc alloy is separately classifiable from zinc, and is a result of manufacture. That being the case, failure to enter in the statutory record does justify its confiscation.
4. The appellant, prior to engaging in the alloying of zinc sent out to job worker for this purpose. It did not receive back the entire quantity of zinc which it sent out to the job worker. It received from him a quantity of alloy equal in weight to the quantity of the zinc that it sent out. Since aluminium account for around 3% of the alloy, the appellant therefore received 3% less of the zinc which it sent out. The appellant took as modvat credit the duty paid on the quantity of zinc that it received. The Commissioner finds that the appellant therefore took credit in excess of what it was entitled to. It was not entitled to take modvat credit on the 3% of the zinc that the job worker has kept. It was the appellant's contention in reply to the notice that deemed modvat credit was available on the aluminium which was used by the job worker to alloy zinc and the amount of such credit should be deducted in order to arrive at the credit wrongly taken of the duty paid on the zinc.
5. The Commissioner has not dealt with this argument and it has been repeated before me. I am however unable to accept it. The representative of the appellant clarifies that the appellant did not receive aluminium in its factory and pass it on the job worker. It also did not arrange for the aluminium to be supplied directly to the job worker for being used to alloy the zinc that the appellant sent. The job worker obtained the aluminium on his own, and the details and particulars of these were not known to the appellant at any time. In that situation, I fail to see how the appellant would be entitled to the benefit of deemed modvat credit if that is available on the aluminium. Aluminium cannot by any stretch of imagination be considered to be an input at the hands of the appellant, and therefore deemed credit would not be available to the appellant. I am not concerned with whether such credit was available to the job worker or not. The representative of the appellant relies upon a circular of the Board. I do not see how this helps him. The circular appears to say that credit a can be taken by the "manufacturer which was purchased from the market vis-a-vis those which were sent to job worker for manufacture of the final product". Insofar as the appellant is concerned, neither situation has taken place.
6. The appeal is accordingly dismissed.