2000 (8) TMI 516 - Commissioner - Central Excise

Summary

Issues:
1. Central Excise duty demand confirmation under Rule 57-I
2. Penalty imposition under Rule 173Q(1)(bb) and Section 11AA
3. Alleged contravention of Rule 57J(3) regarding excess credit
4. Failure to give intimation to jurisdictional Asstt. Commissioner
5. Incorrect duty payment on waste and scrap

Issue 1: Central Excise duty demand confirmation under Rule 57-I
The appellant appealed against the Order-in-Original confirming a Central Excise duty demand of Rs. 23,34,474 under Rule 57-I. The adjudicating authority imposed a penalty of Rs. 5 lakhs under Rule 173Q(1)(bb) and invoked Section 11AA for interest on appellants.

Issue 2: Alleged contravention of Rule 57J(3) regarding excess credit
The show cause notice alleged that the appellant contravened Rule 57J(3) by availing excess credit of Rs. 23,34,474. It was claimed that the appellant failed to give proper intimation to the jurisdictional Asstt. Commissioner regarding job workers and incorrectly paid duty on waste and scrap.

Issue 3: Incorrect duty payment on waste and scrap
The adjudicating authority found the appellant in contravention of Rule 57J(3) and imposed a duty demand. The appellant argued that they correctly discharged duty on waste generated during job work. The appellate authority examined the process of waste quantification and Modvat credit availed by the appellant.

Analysis:
The appellant sent inputs directly to a job worker's factory and received intermediate products in their factory, claiming Modvat credit on the entire input quantity. The appellate authority found this practice in compliance with Rule 57F(4). The appellant paid duty on waste generated at the job worker's factory, as required by Rule 57F(5)(ii), irrespective of whether the job worker paid the duty. The quantification of waste was found acceptable, and the appellant correctly availed Modvat credit under Rule 57J(2) and 57J(3).

The appellate authority examined each objection raised by the lower authority and found the appellant's explanations satisfactory. Citing relevant case laws supporting the appellant's claim, the authority concluded that the Modvat credit was rightly availed, and duty on waste was correctly paid. Consequently, the appeal was allowed, granting consequential benefit to the appellants.