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Maccas Automotive V/S Commissioner of C. Ex. & S.T., Delhi-IV

    Final Order Nos. A/61710-61713/2017-EX(DB) in Appeal Nos. E/900-903/2009-DB

    Decided On, 29 August 2017

    At, Customs Excise Service Tax Appellate Tribunal Chandigarh Bench

    By, THE HONORABLE JUSTICE: ARCHANA WADHWA
    By, MEMBER AND THE THE HONORABLE JUSTICE: DEVENDER SINGH
    By, MEMBER

    For Respondents: Satyapal, AR



Judgment Text


1. On matter being called, neither anybody appeared for the appellant nor is there any adjournment request. As the matter is being repeatedly coming up on board, we deem it fit to decide the appeals after hearing the ld. AR and after going through the impugned orders. As all the appeals are arising out of the same impugned order of authorities below vide which demand of Rs. 49,213/- stands confirmed against M/s. Maccas Brakes Automotive Pvt. Limited (hereinafter referred to as M/s. Maccas Brakes for short) along with imposition of penalty of identical amount and penalties of varyi

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ng amounts imposed upon the other appellants, all the four appeals are being disposed of by a common order. As per facts on record, M/s. Maccas Brakes are engaged in the manufacture of clutch facing falling under Chapter 87 of the first schedule to Central Excise Tariff Act, 1985. As their total clearances were more than the exemption limit provided under small scale notification, they were clearing their final products on payment of duty, after availing the benefit of Cenvat credit.

It is seen that apart from manufacturing goods on their own behalf they were also manufacturing clutch facings for M/s. Maccas Automotive which was a proprietary unit of the Director of M/s. Maccas Brakes on job work basis, in terms of Notification No. 84/94. It is seen that M/s. Maccas Automotive sent the material i.e. inputs and other raw material to M/s. Maccas Brakes under challans issued in terms of Notification No. 84/94 and also furnished copy of the undertaking submitted by them with their jurisdictional Assistant Commissioner of Central Excise.

The notification in question requires the principal manufacturer to give an undertaking to their jurisdictional Assistant Commissioner to account for the said goods in their record and to discharge the duty liability, if any.

On receipt of such raw materials as also the undertaking, M/s. Maccas Brakes manufactured the goods and cleared the same without payment of duty to M/s. Maccas Automotive. As the total clearances to M/s. Maccas Automotive was less than Rs. one crore, provided under the small scale notification, no duty was being paid by them.

It was subsequently found that M/s. Maccas Automotive was not a manufacturer and it was simplicities selling the fully packed goods received from M/s. Maccas Brakes in the market. As such, Revenue entertained a view that inasmuch as, M/s. Maccas Automotive was a trader only, the benefit of the Notification No. 84/94, which is available to the manufacturer only, could not have been availed by them. Further, it was opined that as M/s. Maccas Brakes has manufactured the goods, the liability to pay Central Excise duty falls upon them. Accordingly, proceedings were initiated against all the assessees proposing to confirm demand of duty against M/s. Maccas Brakes in respect of the goods seized from the premises of M/s. Maccas Automotive and proposing to confiscate the goods as also to impose penalty. The same resulted in passing of present impugned order, which stands upheld by Commissioner (Appeals).

2. After applying our minds to the arguments made by ld. DR appearing for the Revenue as also to the reasoning adopted by the lower authorities, for confirming the demands and imposing penalties, we find that M/s. Maccas Brakes against whom the demand stands confirmed, manufactured the goods on job work basis for and on behalf of M/s. Maccas Automotive. M/s. Maccas Automotive sent the material under the cover of challans to M/s. Maccas Brakes, after giving an undertaking to its jurisdictional Assistant Commissioner of Central Excise, as required in the notification. No objection was ever raised by the Assistant Commissioner and the said M/s. Maccas Automotive were permitted to follow the procedure of the notification in question. It is only subsequently, Revenue entertained a view that since M/s. Maccas Automotive was not a manufacturing unit but was a trading unit, they were not entitled to the benefit of the notification. Confirmation of demand of duty against M/s. Maccas Brakes is on the ground that principal manufacturer who sent them the material in terms of the notification in question, after following the due procedure, was liable to pay duty inasmuch as, M/s. Maccas Automotive was not entitled to the benefit of notification. Admittedly the due procedure, as prescribed in the notification, was followed by M/s. Maccas Automotive, thus giving a reasonable belief to M/s. Maccas Brakes that benefit of the notification, is available to their principal manufacturer. Such belief was strengthened by the fact of production of an undertaking by M/s. Maccas Automotive, which stand accepted by their jurisdictional Assistant Commissioner. A manufacturing unit, who is in business, proceeds on the basis of documents produced before him and cannot be held to be a legal expert so as to come to a conclusion, on his own that the benefit of notification was not available to M/s. Maccas Automotive, being a trading firm, especially when an undertaking was produced before them and no objection was ever raised by the Revenue, prior to the period in question. Admittedly, the Assistant Commissioner is more knowledgeable about the legal position and having granted the permission to a trading unit to follow the procedure of exemption notification in question, the duty liability cannot be subsequently fastened on the manufacturing unit, who had acted according to the documents produced before him. As such, we are of the view that such subsequent change in the opinion of the Revenue, resulting in confirmation of demand against the manufacturing unit or confiscation of the goods or imposition of penalties, cannot be appreciated. Accordingly, the impugned orders are set aside and all the appeals are allowed with consequential relief to the appellants
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