Judgment:
1. Central Excise officers had visited the appellants factory and noticed that some articles of crown wheels lying in the factory premises. It was alleged that these articles were machined, drilled and bored. These were subsequently described as flanges, driving flanges, stub ends and crown wheels. It was alleged that these goods are excisable and therefore Appellants ought to have taken licence for manufacture of these goods. These goods were therefore seized. Show cause notice was issued to the appellants for confiscation on the ground that these goods were not accounted in the statutory record and the appellants had not applied for Central Excise licence. Imposition of penalty was also proposed.
1.2 Collector of Central Excise on initiation of these proceedings held that goods are classifiable under different chapter headings. These cannot be considered as pieces roughly shaped by rolling or forging.
These goods had identity and the essential/character of plates or machinery/automobile parts. He, therefore, confiscated the goods but allowed these to be redeemed on payment of redemption fine of Rs. 20,000/-. Penalty of Rs. 10,000/- was also imposed.
2. Arguing on behalf of the Appellants the ld. Counsel submitted that the goods cannot be considered as completely finished. These were only forged product; only flanges were in machined condition. Many defects were still to be removed. They would have cleared the goods after obtaining Central Excise licence.
3. He submitted that unduly harsh view has been taken in this case and cited in support of his contention the decision in case of D.C.W. Ltd. v. C.C.E.4. Ld. DR reiterated the departmental arguments and submitted that the goods had attained essential shape/character of complete or finished articles. These cannot be considered merely as pieces roughly shaped by rolling or forging of Iron and Steel.
5. We have heard both sides. Show cause notice alleges that flanges are classifiable under Chapter Heading 73.05, Driving flanges under Heading 87.06 and stub end 84.79 and crown wheels under 87.08. Letter from Joint Director, Prototype Development and Training Centre, Rajkot indicates that samples of crown wheels are proof machined. The letter further clarifies the products which have undergone proof-machining cannot be described as products roughly shaped by forging or rolling.
It is admitted position that flanges were machined, drilled and bored in their factory. The Production Manager admitted that driving flanges, crown wheels, driving flanges were machined and drilled after and stub ends are machined and bored. It is clear therefore that these were not piece roughly shaped by forging but had essential/final shape of articles. There is no evidence that extensive operations were carried out subsequent to removal from the factory to give them shape and character of the finished products. In view of this goods cannot be considered as pieces roughly shaped by forging and have to be held excisable under respective headings as held by the Collector.
Therefore, we find no infirmity in the order of the Collector as such.
Considering, however, that goods were still in the factory, there is no allegation that the goods had been removed without payment of duty, we are of the view that reduction of redemption to Rs. 5,000/-from Rs. 20,000/- and penalty to Rs. 2,500/- from Rs. 10,000/- would meet the ends of justice. Ordered accordingly. Subject to this modification appeal is otherwise rejected and order upheld.