2008 (7) TMI 439 - HC - Central Excise

Summary

Issues:
1. Jurisdiction of the Tribunal to issue directions beyond the scope of show cause notice.
2. Interpretation of duty liability on diesel engines used in manufacturing centrifugal pump sets.
3. Applicability of Rule 57CC of the Central Excise Rules in the present case.

Jurisdiction of the Tribunal:
The appellant challenged the Tribunal's order, arguing that the directions issued were beyond the scope of the show cause notice, Order in Original, and Order in Appeal. The appellant contended that allowing the order to stand might lead to the Tribunal exceeding its jurisdiction in any case. The appellant emphasized that the dispute involved a principle rather than the amount in question, which was only Rs. 14,000. However, the Tribunal found that no substantial question of law arose from the impugned order, as the Tribunal's decision was justified based on the peculiar facts and circumstances of the case.

Interpretation of Duty Liability:
The case involved the appellant, a manufacturer of I.C. Diesel Oil Engines, using a part of their production captively in manufacturing centrifugal pump sets. While the final product, the couple sets, were exempt from duty, the Revenue claimed that the diesel engines used in manufacturing were exempted and not dutiable. The appellant disagreed and started paying 8% of the value of the diesel engines as a debit in their Modvat credit. The issue arose when the refund of this amount was rejected by the authorities. The Tribunal held that the appellant's contention that the diesel engines were dutiable was valid, and the amount to be refunded was the extra amount paid by the appellant, not the entire 8% debited.

Applicability of Rule 57CC:
The Tribunal observed that the Revenue's demand for duty on the diesel engines conflicted with their own view that the engines were exempted. The Tribunal agreed with the appellant's position that the engines were dutiable, and the controversy arose due to the Revenue's insistence on Rule 57CC of the Central Excise Rules. By accepting the appellant's stand and rejecting the Revenue's, the Tribunal concluded that the appellant was liable to pay duty on the diesel engines used in manufacturing centrifugal pumps. The Tribunal found that no new legal issue was raised, and the appeal was dismissed with costs.