SUNCO RUBBER LTD. AND ORS. Vs. CCE

JUDGEMENT

(1.) THESE four appeals are directed against the order in Original No. 30/97 dated 26.12.1997 passed by the Commissioner of Central Excise, Trichy whereby the Commissioner has demanded duty and imposed penalty as per details given below:

(2.) M /s. Sunco Rubbers Ltd. (M/s. SRL) have received raw materials like masticated rubber and carbon black etc. from M/s. Taurus Industrial Corporation (M/s. TIC for short) and M/s. Jayton Polymers (M/s JP for short) under Rule 57R(2) (now Rule 57F(3)) of the CE Rules, 1944 for further processing and return to the suppliers. It was seen from the declarations filed by M/s. JP and M/s. TIC, that after processing at M/s. SRL the processed pre -cured tread rubber merged and the same were cleared to the raw material suppliers under Rule 57F(2) Challans. M/s. SRL instead of clearing the processed goods on payment of duty at their end, have returned the goods to the raw material suppliers with intent to pay concessional rate of duty at the end of the raw material suppliers. As it appeared to the department that the goods processed at the premises of M/s. SRL were fully manufactured goods, they should have paid full duty while clearing and since this was not done, they have contravened the provisions of Rule 57F(2) (now 57F(3)) with intent to evade payment of duty. Show cause notice was therefore, issued proposing to demand duty and imposing penalty which culminated in the order of adjudication passed by the Commissioner by which he has demanded duty and imposed penalty as detailed above.

(3.) SHRI A. Jayachandran, learned JDR appearing for the department on the other hand submitted that the de -flashing done by the primary manufacturer does not amount to manufacture. He has also invited our attention to the order of the Tribunal in the case of Elecon Engineering Co. Ltd. v. CCE reported in wherein it was held that processing of structural materials like cleaning, cutting to sizes, trimming, drilling holes, welding, bolting etc. for use as building elements only a fabrication activity and does not amount to manufacture and no new goods having come into existence to warrant levy of duty.