RAMA STAMPINGS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN the impugned order, the Additional Collector confirmed the demand of duty amounting to Rs. 1,84,355/ - under Rule 9(2) read with proviso to Section 11A(1). He also imposed penalties of Rs. 5,000/ - under Rule 173Q(1), Rs. 2,000/ - under Rule 9(2) and Rs. 2,000/ - under Rule 52A of the Central Excise Rules, 1944 on the assessee. Being aggrieved by this order, the appellants have filed the captioned appeal before us.

(2.) THE facts of the case briefly stated are that the assessees manufacture electric stampings and got themselves registered as SSI with the Director of Industries, Rajasthan from 18 -11 -1989. The Department alleged that since their clearance of excisable goods during 1988 -89 were Rs. 9.30 lacs i.e. in excess of Rs. 7.5 lacs during the year 1989 -90, they could not avail of exemption under Notification No. 175/86 without getting themselves registered as SSI unit with the Director of Industries and since during the year 1989 -90, they got registration as SSI unit from 18 -11 -1989, their clearances worth Rs. 8,77,880/ - during the period 1 -4 -1989 to 17 -11 -1989 would not be exempt from duty and would be liable to duty amounting to Rs. 1,84,355/ -.

(3.) THE appellants in reply to the SCN submitted that they were buying used electric stampings from various electricity Boards; that they segregated the electric stampings which can be sold as such by simply removing the rust and the stampings, which needed cutting into smaller sizes to make them usable; that the first kind of stampings requiring simply cleaning and removal of rust; that this activity would not amount to manufacture; that in regard to second type of stampings after cleaning and removing of rust, the same were cut into smaller sizes and again this activity also would not amount to manufacture as old and used electric stampings after cleaning, removal of rust, remain electric stampings. It was argued that the third type of stamping which were not usable at all were sold as such; that for the purpose of definition of manufacture, the appellants cited and relied upon the decision of the Apex Court in the case of Delhi Cloth and General Mills Limited 1977 (1) E.L.T. J199. It was contended that even if the process of cutting of used stampings into smaller sizes is treated as process of manufacture, the assessee would still be eligible for full duty exemption in respect of clearances of such stampings during the year 1989 -90 in terms of para 4 (a) of Notification No. 175/86 as their aggregate value of clearances during the preceding year 1988 -89 did not exceed Rs. 7.5 lacs. It was also contended by them that it was not correct to say that the asseessee's clerances of excisable goods during the year 1989 -90 were Rs. 9.93 lacs as during this year stampings worth Rs. 5.08 lacs sold by the assessee were those which had been obtained by cleaning of the old and used stampings purchased by them and that stampings worth Rs. 4,74,635/ - sold by them were those which they had obtained by cutting bigger stampings into smaller sizes through M/s. Sunil Engg. Works on job work basis; that these stampings even if the process of cutting of used stampings is treated as a manufacture, they did not manufacture stampings worth Rs. 4.74 as it is a settled law that raw material supplier is not a manufacturer. It was, therefore, contended that they were entitled to the benefit of Notification No. 175/86 during the year 1989 -90 in terms of para 4(b) of Notification No. 175/86.