TMI Blog2005 (7) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. Kiran Silicate (P) Ltd. (KSL, for short) and M/s. Nannilam Silitcate (P) Ltd. (NSL, for short) respectively in September, 1992 for conversion to soluble glass on job work basis in terms of Rule 57F of the Central Excise Rules, 1944. The job workers viz. KSL NSL processed the input and supplied respectively 190.44 MTs and 88.155 MTs of soluble glass to SI . The principal manufacturer (SI) found the goods defective and returned the same to the job workers for re-processing. KSL NSL could not re-process the soluble glass and, therefore, they treated it as waste and sold it to third parties on payment of duty at the rate of 5% by availing SSI concession. For this payment of duty, both KSL NSL made use of Modvat credit taken on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luble glass returned by the principal manufacturer, disposed it of as waste on payment of duty @ 5% (concessional rate applicable to SSI unit). For a non-SSI unit, the applicable rate of duty was 15%. The lower authorities have demanded the differential duty on the soluble glass [@ 10%] from SI. This demand is under challenge in the appeals filed by SI. I find that SI recovered their cost of soda ash (input supplied to job workers for conversion into soluble glass) from KSL NSL by issuing debit notes to them in March, 1993. This conduct of SI had the effect of breaking the chain of transactions under Rule 57F and consequently disentitled themselves to the benefit of the said rule. Hence the removal of soluble glass from the factory of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers. In these circumstances, the penalties imposed on SI are on the higher side. In the result, Appeal Nos. E/262/2003 E/264/2003 filed by SI get disposed of in the following manner :- (a) It is held that SI is liable to pay the differential duty on soluble glass removed from their factory to the premises of KSL NSL and subsequently disposed of by the latter on payment of duty at concessional rate. (b) The original authority is directed to re-quantify demand of duty after allowing the benefit of Section 4(4)(d)(ii) of the Central Excise Act to the assessee. (c) The penalties imposed on the appellants are reduced by 50%. 4. M/s. KSL NSL were independent manufacturing units which were engaged in the manufacture of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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