Indian Sugar and General Engg. Vs. Cce - Court Judgment

Excerpt:
1. the challenge in this appeal at the instance of the assessee is against he imposition of penalty under section 11ac and demand of interest under section 11ab upheld by commissioner (appeals) under order dated 16.6.2003.2. the appellants are engaged in the manufacture of goods falling under chapter 73 and 84 of the schedule to the central excise tariff act, 1985. they also undertake job work and repair on free issue materials received from customers. according to the appellant the job work they are doing in connection with roller assembly shaft sent by its sister concern saraswati sugar mills is in the nature of repair work.therefore, they are not liable to pay any duty on the job work. still they paid duty but without including the value of the roller assembly shaft received by them. show cause notice was issued demanding an amount of rs. 6,95,158/- on the value of the forgings supplied by saraswati sugar mills. appellant had already paid the amount before issue of show cause notice and submitted reply contending that the ratio of ujagar prints etc. etc. versus union of india and others (1989 (39) e.l.t. 493 (sc) will not be applicable to the facts of their case.under these circumstances it is contended by the appellant no penalty should have been imposed under section 11 ac nor any interest demanded under section 11 ab. at the time of hearing of the appeal we were taken through the relevant invoices. the nature of the job work done is seen as follows from the invoice :- "sugar machinery parts : shelling & grooving of discharges roller assly shaft no.sy-4 drs. no. ym-704-r-5 fitted with juice ring as per detail given in challan. party material being returned to the party recd. under 57ac(5) challan no.68 dt. 20.3.01 value of material rs. 4765287" 3. the above would show that the job work done by the appellant was in the nature of repair work. if that be so the appellant is fully justified in not following the ratio of the decision of unagar prints.the demand of penalty and interest are therefore not sustainable.4. the order impugned is set aside to the extent challenged in the appeal and the appeal is allowed as above.

Judgment:
1. The Challenge in this appeal at the instance of the assessee is against he imposition of penalty under section 11AC and demand of interest under section 11AB upheld by Commissioner (Appeals) under order dated 16.6.2003.

2. The appellants are engaged in the manufacture of goods falling under Chapter 73 and 84 of the Schedule to the Central Excise Tariff Act, 1985. They also undertake job work and repair on free issue materials received from customers. According to the appellant the job work they are doing in connection with roller assembly shaft sent by its sister concern Saraswati Sugar Mills is in the nature of repair work.

Therefore, they are not liable to pay any duty on the job work. Still they paid duty but without including the value of the roller assembly shaft received by them. Show cause notice was issued demanding an amount of Rs. 6,95,158/- on the value of the forgings supplied by Saraswati Sugar Mills. Appellant had already paid the amount before issue of show cause notice and submitted reply contending that the ratio of Ujagar Prints Etc. Etc. versus Union of India and Others (1989 (39) E.L.T. 493 (SC) will not be applicable to the facts of their case.

Under these circumstances it is contended by the appellant no penalty should have been imposed under Section 11 AC nor any interest demanded under Section 11 AB. At the time of hearing of the appeal we were taken through the relevant invoices. The nature of the job work done is seen as follows from the Invoice :- "Sugar Machinery parts : Shelling & grooving of discharges roller assly shaft No.SY-4 DRS. No. YM-704-R-5 Fitted with juice ring as per detail given in challan. Party material being returned to the party recd. Under 57AC(5) challan No.68 dt. 20.3.01 value of material Rs. 4765287" 3. The above would show that the job work done by the appellant was in the nature of repair work. If that be so the appellant is fully justified in not following the ratio of the decision of Unagar Prints.

The demand of penalty and interest are therefore not sustainable.

4. The order impugned is set aside to the extent challenged in the appeal and the appeal is allowed as above.