Customs, Excise and Gold Tribunal - Delhi
International Engg. And Mfg. Services ... vs Cce on 8 November, 2000
Equivalent citations: 2001(73)ECC266, 2001(135)ELT551(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this appeal filed by M/s. International Engineering & Mfg. Services Pvt. Ltd. the issue involved is whether exemption under Notification No. 214/86-CE dt. 25.3.86 is available in respect of goods manufactured by them as Job Worker.
2. Shri Pankaj Mullick, Ld. Advocate, submitted that the appellants are job workers engaged in fabrication of parts of Clyinders; that thay received inputs from M/s. Supreme Clyinders Ltd. under Rule 57F(4) of the Central Excise Rules and convert the same into Foot Rings and VS. Plates which are parts of L.RG. Clyinders; that the Dt. Commissioner Central Excise under Adjudication Order No. 131/98 dt. 30.10.98 confirmed the demand of duty amounting to Rs. 4,89,504 and imposed penalty of equal amount under Section 11-AC of the Central Excise Act holding that M/s. Supreme Clinders did not follow the procedure prescribed under Rule 57F of the Central Excise Rules; that the process of fabrication amounts to manufacture and as such the appellants are liable to pay Central Excise Duty; that Commissioner (Appeal) also under impugned Order has rejected their appeal. The Ld. Advocate, further, submitted that the Adjudicating Authority has admitted that they are job worker and they have also been given the benefit of the same as the Dt. Commissioner did not confirm the duty up to January 95 as up to that period they were manufacturing Foot Rings and VS. Plates in the factory premises of M/s. Supreme Cylinders only; that even Commissioner (Appeal) has not disputed the fact that they were job workers and they were receiving the inputs under Rule 57F(4) which is apparent from Para 2 of the impugned Order itself. He, therefore, contended that once their status as job workers is not disputed and the goods fabricated by them have gone to M/ s. Supreme Clyinders who have utilised the same in the manufacture of final product which have been cleared on payment of duty, no excise duty is chargeable from them. He also mentioned that under Notification No. 214/86 it is the principal manufacturer who has to give undertaking to the Assistant Commissioner; that non-fulfillment of the procedural condition cannot deprive them of the substantive benefit under the Notification. In support of his contention, he relied upon the decision in the case of M/s. Maschmeijer Aeromatics (I) Ltd. v. CCE . The Ld. Advocate, further, mentioned that it is settled law that benefit of Notification can be claimed at any stage as held by the Tribunal in the case of Sonic Band International v. CCE, Vadodara 1999 (109) ELT 524 and Rubicon v. CCE .
3. The Ld. Advocate, further, submitted that the Central Excise Departmental has also seized finished goods from their factory premises which have been confiscated with an option to redeem the same on payment of fine of Rs. 50 thousand; that the goods are not liable to confiscation as held by the Tribunal in the case of Bhilai Conductors (P) Ltd. v. CCE, Raipur 2000 (91) ECR 569 (T) wherein it was held that in absence of mens rea, the goods cannot be confiscated which are lying inside the factory. He also mentioned that the duty has been confirmed against the appellants for the period from April 1995 to April 1997 and as such the major part of the demand is before the provisions of Section 11-AC of the Central Excise Act came into force; that accordingly no penalty can be imposed on them under Section 11 AC as held by the Tribunal in the case of Maruti Udyog Ltd. v. CCE, New Delhi 1998 (25) RLT 246. Finally he submitted that for the period 1995 to 1997, the Department has allowed them the benefit of small scale exemption Notification but the same has been denied in respect of April 97, on the ground that they had not filed any declaration under Notification No. 16/97-CE; that the declaration under the Notification was required to be filed by an assesse who wanted to opt for payment of Central Excise duty instead of availing the exemption and as such no duty is payable by them in respect of clearances effected in April 97.
4. Countering the submissions, Shri K.K. Goyal, Ld. D.R., submitted that as it is not in dispute that they have fabricated Foot Rings and VS. Plates out of H.R. Sheets supplied by M/s. Supreme Clyinders, they are liable to pay the duty that it is not anybody's case that these goods are not excisable goods; that as the raw material has been received by them without any challan under Rule 57F(4) they had no reason to believe that they were operating under Notification No. 214/86-CE; that no explanation is forthcoming as to why the raw material was received by them without any challan. It is settled law that the job workers is the manufacturer of the goods under Section 2(f) of the Act and the raw material supplier is not the manufacturer of the goods. Reliance was placed on the decision in the case of Card Cure Engineer Company v. CCE , and CCE, Vadodara v. Gujarat Electricity Board 1996 (81) ELT 204. The Ld. SDR also relied upon the decision of the Larger Bench of the Appellate Tribunal in the case of Jay Yuhshin Ltd. v. CCE, New Delhi 2000 (39) RLT 501, wherein it was held that the benefit of the Notification will not be available if the conditions specified therein are not complied with. It was also held in the said case that for want of factual substantiation it cannot be accepted that Maruti Udyog Ltd" had given any undertaking under Para 2 of Notification No. 214/86 in relation to the manufactured items sold by the appellants to Maruti Udyog Ltd." In respect of penalty imposed under Section 11 AC of the Act, the Ld. SDR submitted that the penalty will atleast be imposable for the period for provisions of the Section were in force. Finally, he submitted that the seized goods were liable for confiscation as no statutory records were maintained by the Appellants. He relied upon the decision in the case of Desh Rolling Mills v. CCE, Delhi 2000 (40) RLT 906.
5. We have considered the submission of both the sides. The facts which are not indispute are that the raw material HR sheets were received by the Appellants from M/s. Supreme Cylinders and they fabricated Foot Rings and V.S. Plates. As distinct excisable goods emerged as a result of process undertaken by the Appellants, duty becomes payable by them. We do not find any force in the submissions of the Ld. Advocate that they are not the manufacture of the excisable goods as they have sent back the goods after fabrication to principal manufacturer who has in turn used them in the manufacture of final products. It is well settled law that the raw material supplier is not the manufacturer. The Supreme Court in many cases such as Ujagar Prints 1988 (19) ECR 578 (SC) and Kerala State Electricity Board has held that the Job workers are the manufacturers of the goods. The similar views have been held by theTribunal in the cases relied upon by the Ld. SDR. In CCE Vadodara v. Gujarat Electricity Board, supra, it was held by the Tribunal that "merely because the electricity board was supplying raw materials the prestressed concrete poles were manufactured as per their specifications through the actual manufacturer or job worker on payment of job work chargesthe supplier of raw material could not be deemed as manufacturer of the goods.
6. The fact that in the present matter, the raw material supplier has utilised goods manufactured by the appellants will not change the position as far as the question whose manufacturer is concerned. The Appellants have claimed the benefit of Notification No. 214/86-CE which provides exemption to the goods manufactured in a factory as job work and used in or in relation to the manufacture of final products on which duty of excise is leviable. This Notification is a conditional notification and the benefit of the Notification will be available only on fulfillment of the conditions specified therein. Para2 of the Notification provides that the exemption contained in this notification shall be applicable only to the goods in respect of which the supplier of raw material has given an undertaking to the Assistant Commissioner having jurisdiction over the factory of the job workers that the said goods shall be used in or in relation to the manufacture of the final products. In the present matter no evidence has been brought on record by the appellants to prove that the supplier of the raw material had supplied raw material to them under the-provisions of Notification No. 214/86. On query being made by the bench, the Ld. Advocate could not also show any documents on the basis of which the Appellants presumed that they were working under Notification 214/86. As the conditions specified in the Notification have not been complied with, the benefit of Notification is not available to the goods manufactured by them. For the same reason the decision in the case of Rubicon and Sonic Band International referred to by the Ld. Advocate are not applicable. The similar views were expressed by the Tribunal in Desh Rolling Mills case, supra., wherein it was held that Notification No. 214/86 nowhere provides that the supplier of the raw material will be liable to pay the duty on the goods manufactured as a Job Work." The Ld. Advocate has also mentioned that the benefit of small scale exemption has not been allowed to them for the clearances effected in April 1997. On query from the Bench, he fairly intimated that this plea was not raised in appeal filed by the appellants before the Commissioner (Appeals). As this issue regarding denial of SSI exemption was not challenged in appeal before the lower appellate authority, it cannot be raised at the second appeal stage. We do not agree with Ld. Advocate that it is a legal plea.
7. We, therefore, uphold the demand of Central Excise Duty as confirmed in the impugned Order.
8. As far as imposition of penalty under Section 11AC of the Central Excise Act, is concerned, the Ld. Advocate has rightly relied upon the decision in the case of Maruti Udyog Ltd., wherein it was held that the penalty under Section 11 AC cannot be imposed in respect of transaction which have taken place prior to the date of the provisions of Section 11AC came into force. We, therefore, set aside the penalty imposed on the appellants and remand the matter to the Adjudicating Authority for deciding the matter afresh as far as penalty is concerned.
9. The seized goods were the goods manufactured by the appellants and these were not entered into statutory records. Rule 173Q(1)(b) of the Central Excise Rules provides for confiscation of excisable goods which are not accounted for. The decision in the case of Bhilai Conductors Put. Ltd., relied upon by the Ld. Advocate, is not applicable to the facts of the present matters as in that case Tribunal was of the view that no mens rea was involved in non-accountal of the goods in RG. 1 Register. The facts in the case of Bhilai Conductors reveal that the plea taken by the appellants therein was that the goods were lying for quality control tests and the goods which were packed in the boxes were manufactured on the same day. In the present matter the appellants have, in the past, removed the goods without discharging duty liability. Therefore, we uphold the confiscation of the seized goods and their release on payment of redemption fine. However, taking into consideration the value of the goods seized, we are of the view that the interest of justice will be met if they pay redemption fine of Rs. 25,000. We therefore, reduce the redemption fine from Rs. 50,000 to Rs. 25,000.
The appeal is disposed of in above terms.