FERROUS FORGINGS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) In this case M/s. Ferrous Forgings Ltd. have only challenged the imposition of penalty of Rs. 2,87,424/ - which is equivalent to the amount of duty confirmed against them.

(2.) Shri S.K. Pahwa, learned Advocate, submitted that the Appellants manufacture steel forgings which were sent by them for machining outside their factory premises to job workers under the provision of Rule 57F(4) of the Central Excise Rules, 1944 at the relevant time; that the Central Excise officers on visit of their factory on 28 -8 -97 found from the scrutiny of 57F(4) challans and register that the scrap generated at the premises of job workers was not received back by them; that the officers worked out that the quantity of 440.496 M.T. of scrap involving central excise duty Rs. 2,87,424/ - was not received back during the period from January, 1997 to June, 1997; that they discharged the duty liability on the said quantity of scrap in September, 1997. The learned Advocate, further, submitted that the Appellants are not challenging the demand of duty and they are only challenging the imposition of the penalty equivalent to the amount of duty; that it was not practically possible to receive small quantity of scrap from the job workers, and therefore, they adopted a procedure under which the scrap was retained by the job workers and the duty was paid by them once in 4 to 6 months; that they had paid the duty in this manner twice earlier in October, 1996 and February, 1997 and the fact was mentioned in RG 23A, Part II and no objection was taken by the Department; that the entire material had been collected by the officers from the statutory records which goes to show that the Appellants had not concealed anything or they did not had any intent to evade any payment of duty. The learned Advocate, therefore, prayed that the penalty -may be set aside or nominal penalty, if at all required, may be imposed.

(3.) Countering the arguments, Shri H.C. Verma, learned D.R., submitted that it has not been disputed by the Appellants that the scrap was never received back from the premises of the job workers and the Central Excise duty payable on such scrap was not paid immediately; that as the Central Excise duty was not paid by them the penalty is imposable; that as the fact of giving scrap at the job workers premises was not disclosed by them, there was suppression of facts and imposition of penalty under Section 11AC of the Central Excise Act is justified.