RASHTRIYA ISPAT NIGAM LTD. Vs. CCE

JUDGEMENT

(1.) BY this appeal, the appellants are challenging the correctness of Order -in -Original No. 30/03 -04(RP) dt. 29.9.2003 passed by the Commissioner of Central Excise, Visakhapatnam.

(2.) THE appellants, a Public Sector Undertaking, are engaged in the manufacture of various Iron and Steel products falling under Chapter 72 of the schedule to the Central Excise Act, 1985. They are sending semis like billets, blooms etc. for conversion into rolled products to various job workers or conversion agents on payment of duty as "stock transfer". The conversion agents, after conversion, clear the material to the customers as specified by the appellants in their delivery orders after paying duty. During the period in question when the re -rolled products are covered under the special procedure, the duty was paid by the conversion agents under the Hot Re -rolling Steel Mills Annual Capacity Determination Rules (HRSMACD), 1997. The DEPARTMENT, on scrutiny, found that during the period December 1997 to October 1999, the appellants had collected duty on such re -rolled products at higher rates than the one paid by the conversion agents through their delivery order and hence have raised demands in terms of Section 11D of the Central Excise Act for depositing the same in the Government's account. The appellants contend that conversion agents convert blooms and billets into TOR steel, MS bars etc. and clear the converted material on payment of duty at Rs. 300 per MT under the compounded levy scheme under Section 3A(2) of the Central Excise Act. They were not taking credit of duty paid by the appellants. It is contended that the Headquarters Marketing Department issued a document called "delivery orders" to enable their customers to take delivery of the goods meant for them. Such delivery orders are issued both for the goods manufactured by the appellants themselves or for the goods manufactured by the conversion agents. The delivery orders for the goods manufactured by conversion agents are issued by the appellants since the purchase orders for such products are placed by the customer on them. They contend that the delivery orders are essentially in the nature of instructions either to their branches or to the conversion agents to Handover the converted material to the customers or their representatives and is not a document meant for or addressed to the customers. They contend that apart from the delivery orders, the appellants also issue commercial invoices to the customers both for the products as well as for products manufactured by conversion agents. They contend that during period from December 1997 to 31.10.1999, they were using software for generating delivery orders for the delivery of the goods manufactured by them. The element of excise duty was getting indicated on the delivery orders by default. They noticed that even in the delivery order issued for the products manufactured by the job worker the excise duty was getting reflected by default. Therefore, they corrected the software. They contend that the delivery orders issued by them w.e.f. 1.11.1999 in respect of the products manufactured by the conversion agents did not indicate the element of excise duty separately.

(3.) IT is the appellants' contention that provisions of Section 11D are not applicable in the present case since the appellants are not manufacturer of goods in question. They contend that appellants cleared blooms and billets to the conversion agents/job workers on payment of duty on ad valorem basis. It is the conversion agents/job workers who paid duty on the converted products in terms of the HRSMACD Rules @ Rs. 300/ - per MT. Therefore, it is the conversion agents/job workers who are the actual manufacturers of the goods in question. These conversion agents/job workers are independent of the appellants and the transactions between them and the appellants are' on principal -to -principal basis. The fact that the department has accepted the payment of duty from the conversion agents/job workers under the HRSMACD Rules also indicated that even the department has recongnised the conversion agents/job workers as the actual manufacturers. Therefore, they contend that appellants not being manufacturer of the goods in relation to which the demand under Section 11D has been made, therefore the said section is not applicable. He also referred to the amended provisions of Section 11D which was retrospective brought into effect from 20.9.1991 wherein it has been clarified that it is only a person, who is liable to pay duty under the Act and who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods, is required to pay the amount the amount so collected to the credit of the Central Government.