Commissioner of Central Excise Vs. Mutual Inds. Ltd. and ors.

Commissioner of Central Excise vs Mutual Inds. Ltd. and ors.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai Decided Feb 25, 2004

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Citation: sooperkanoon.com/34314
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Judge: M T K.D.
Decided On: Feb 25, 2004
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

Commissioner of Central Excise

Respondent

Mutual Inds. Ltd. and ors.

Excerpt

.....of silvassa unit. therefore, he concluded that it was not possible for a party located in silvassa to take the duty burden in respect of kandivali unit. hence he concluded that, kandivali unit had indulged in removal of goods without payment of duty. the duty was accordingly confirmed and the penalties were imposed.4. i have considered the rival submissions and also perused the orders passed by the lower authorities. in terms of the then existing provisions of rule 57f(4), it is an admitted position that, silvassa unit was required to bring the material despatched under rule 57f(4) back to its factory. instead, the respondents have taken the law into their own hands and removed the goods from kandivali plant without payment of duty. it is their case and submission that, the residual duty that was required to be paid, was paid by them as required in terms of rule 57f(4) on account of failure of non-receipt of the goods at silvassa unit within 60 days time limit provided in the rule.5. this admission is again of no consequence, so far as the liability of duty payable at kandivali plant is concerned. it is not denied by the respondents, that the tv parts which have been manufactured out of the material received from the silvasa plant attracted such duty. it is also not disputed that the said duty was required to be paid by the kandivali unit. it is only the shelter that is being taken to suggest that having discharged the burden of duty that is required to be paid on the inputs on account of failure to receive the goods within 60 days, that payment should be considered to be a payment which is required to be effected by the kandivali unit.6. i observe that the above submission is without any legal basis. the requirement of payment of duty on the inputs not received from the job workers is a separate consequence and the same is independent from the liability of duty to be discharged by the kandivali unit for finished goods (t.v. parts) manufactured by the said.....

Full Judgment

1.1 M/s Mutual Industries are the main respondents. They have two factories, one at Kandivali and the other at Silvassa. The later unit, sent various parts (inputs) to Kandivali unit for manufacture of various T.V. components of plastics totally valued at Rs. 43.97,347.80/- the inputs were to be converted into final T.V.components on job work basis. It is alleged that the Silvassa unit had taken modvat credit in respect of materials used for manufacture of incomplete parts and these were cleared in terms of Rule 57 F (4) to Kandivali unit for manufacturing complete T.V. parts on job work. The proviso to Rule 57F (4), at that point of time, required the respondents to receive the goods back from the job workers after completing the manufacturing processes for which these were sent. The rules had prescribed a time limit of 60 days for return of the goods after completing the job work. Failure to receive the goods back from the job workers within 60 days entailed the appellant's defaulting factory to pay an amount equal to the amount of credit taken on the inputs by the despatching units. In terms of Rule 57F (6) it was also incombent on the despatching unit, to debit an amount of 10% of duty paid on the inputs at the point of despatch. The respondents did that.

However, they did not bring the processed inputs to the parent factory.

Instead they removed the said inputs or T.V. Components manufactured out of the said inputs directly from the Kandivali factory to the respective customers. The Assistant Collector in charge of the Kandivali unit has therefore demanded the duty in respect of T.V. parts valued at Rs. 43,97,347.80/- removed from Kandivali Unit without payment of duty. Consequently some penalties were also imposed. In respect of certain quantities of goods which were seized, redemption fine was also imposed.

2. The Commissioner (Appeals) has, however, only retained the redemption fine, while he set aside the order relating to demand of duty. The respondents are claming that, because it was not economical to bring the T.V. components back to Silvassa, they directly removed the said parts to the customers who are located nearby to the Kandivali Plant. However, the respondents are claiming that, they have paid the residual duty that was required to be paid on such parts, at the Silvassa Unit. The Assistant Collector in his order has observed that, he has sought information regarding the payment of duty in respect of the payment due from the Kandivali factory which are claimed to have been made at Silvassa. However there was no response from the AC in charge of Silvassa Unit. Therefore, he concluded that it was not possible for a party located in Silvassa to take the duty burden in respect of Kandivali Unit. Hence he concluded that, Kandivali unit had indulged in removal of goods without payment of duty. The duty was accordingly confirmed and the penalties were imposed.

4. I have considered the rival submissions and also perused the orders passed by the lower authorities. In terms of the then existing provisions of Rule 57F(4), it is an admitted position that, Silvassa Unit was required to bring the material despatched under Rule 57F(4) back to its factory. Instead, the respondents have taken the law into their own hands and removed the goods from Kandivali plant without payment of duty. It is their case and submission that, the residual duty that was required to be paid, was paid by them as required in terms of Rule 57F(4) on account of failure of non-receipt of the goods at Silvassa unit within 60 days time limit provided in the rule.

5. This admission is again of no consequence, so far as the liability of duty payable at Kandivali plant is concerned. It is not denied by the respondents, that the TV parts which have been manufactured out of the material received from the Silvasa plant attracted such duty. It is also not disputed that the said duty was required to be paid by the Kandivali Unit. It is only the shelter that is being taken to suggest that having discharged the burden of duty that is required to be paid on the inputs on account of failure to receive the goods within 60 days, that payment should be considered to be a payment which is required to be effected by the Kandivali unit.

6. I observe that the above submission is without any legal basis. The requirement of payment of duty on the inputs not received from the job workers is a separate consequence and the same is independent from the liability of duty to be discharged by the Kandivali unit for finished goods (T.V. parts) manufactured by the said unit and cleared therefrom.

This duty having not been discharged, the lower authorities were correct in demanding that duty for clearances effected by the Kandivali Unit. However, the position to be noted is that, the Silvassa Unit having made certain debits in respect of the duty paid on the inputs, initially the 10% and subsequently the payment consequent to non-return of the inputs in 60 days, such entire payment of duty at Silvassa, would be eligible to be granted as credit for discharging the duty paid by the Kandivali Unit. In fact, the Assistant Commissioner in charge of Silvassa Unit did not provide any information to the Assistant Commissioner of Kandivali Unit, despite reminders. Therefore, actual quantum and duty that could be set off, while deciding the final liability of duty by the Kandivali Unit has to be reworked. Therefore, to that extent the duty to be paid by the Kandivali unit will have to be reduced. Since the details are not forthcoming from the records in the appeal papers, I feel that, in the interest of justice, this matter is required to be remanded back to the AC/DC in charge of the Kandivali unit. I also note that, the AC in charge of Silvassa Unit has to examine the work sheet furnished by the respondents showing the actual amount of duty that is paid on the various components despatched by the Silvassa unit and on which duty (viz initial 10% plus balance due to default in receiving goods back in 60 days) was reversed and only thereafter the AC/DC of Kandivali unit would be in a position to determine the residual duty that is required to be paid by the Kandivali unit.

7. Considering the discussion above, I set aside the portion of the order of the Commissioner (Appeals) whereby the duty demand has been dropped. Since there is no cross objection in relation to the confirmation of confiscation and redemption fine, that part of the order of the Commissioner (Appeals) is not disturbed.

8. The appeal of the revenue is consequently allowed with reference to the quantification of the duty liability in respect of the Kandivali Unit in above terms. The order of the original authority is also consequentially set aside only with reference to the amount of duty quantified in respect of Kandivali unit. The AC/DC in charge of Kandivali Unit is directed to requantify the duty liability after taking into account the duty paid at the Silvassa unit on the inputs not returned by the Kandivali unit. The respondents shall produce the necessary challan wise data of duty paid by the Silvassa unit to the AC/DC in charge of Kandivali Unit with reference to despatches made to Kandivali unit duly certified by the jurisdictional Range Superintendent within 2 weeks of the date of this order. The concerned AC/DC of Kandivali unit shall thereafter pass appropriate order on the quantification, within 3 months after following the principles of natural justice.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Mumb... Same Parties Commissioner of Central Excise vs Mutual Inds. Ltd. and ors. Same Subject Excise Same Judge M T K.D.