ORDER
Shri S.S. Sekhon
1. These two appeals are taken up for decision by the common order as they are against the same Order-in-Appeal.
2. The appellant, a S.S.I. Unit,is engaged on the manufacture of G.I Castings and was availing the benefit of Notification No 1/93 dt 28.2.93 as amended.
3. In appeal No E/167/97, a duty demand of Rs 39,394/- notice, along with penalty liability under rule 173 Q for the period 1.3.94 was issued on 26-8-94 alleging that appellants had cleared branded castings, without following the procedure under Notification No 214/86 or under Rule 57 F (3), where branding castings were excisable in Budget 1994.
4. In Appeal No E/426/97, a notice dt. 22.11.94 was issued demanding duty (to be quantified later) and proposing penalty under Rule 173Q as the appellants were found to have, during the period 18.4.94 to 20.6.94, while having given a declaration of clearing Branded Castings to Original Manufacture under Notification No 87/94 dt 13,4,94/-, had cleared such castings to intermediate persons (processors) who did machining on the same and thereafter supplied such machined castings to Original Manufacturer.Thus the benefit of Notification No 87/94 was not available, as goods cleared were not directly supplied to original manufacturers and the good cleared were also not eligible for benefit of Notification No 1/93 as Branded Goods bearing the Brand name of another person were cleared.
5. The Commissioner (Appeals)while confirming the order of the lower authority found-
(i)The Branded goods were admittedly sold by the appellants to 10 customers, other than the original equipment manufacturers and therefore the benefit of Notification No 1/93 was not available as amended by Notification No 87/94.
(ii) The goods have not been directly cleared to the original equipment manufacturers, therefore the goods have been traded/marketed.Board’s Circular No 71/71/94-CE dt 20-10.94 was applicable, only if such goods were directly supplied and used by original equipment manufacturer in further manufacture and not traded. The 10 customers, to whom goods were sold, were neither brand name owners nor manufactures of original equipment, the Board instructions are not applicable.
(iii) As regards the allegation of not following the procedure of Rule 57 F (3) and Notfn. 214/86, he found that since the appellants had admitted that goods cleared were with Brand name of another person, one of them with foreign Brand name, the benefit of Notification No /93 was not available.Since no undertaking as pointed out under Notification 214/86 was produced nor challans as prescribed were made, therefore they were required to pay duty.
6. We have heard Advocate for the appellants who reiterated the written submissions relying upon-
(a)Boards instructions No 71/71/94 CE
(b)TRUs letter F No 540/12/94/-TRU to submit that they have not Traded in the said castings, since-
(i)Castings were made as per specific designs & samples with Brand name of supplier.
(ii) Castings were further used by the supplier as O.E. in case of M/s BDK Engineering Industries Ltd & M[s Kirloskar Oil Engines and they relied upon M/s S.A. Industries Ltd (2000 (121) ELT 393 & 1999 (112) ELT 885.
The learned DR reiterated the findings of the Commissioner (Appeals).
7. After considering the submissions we find-
(a)In case No E/167/97, the SCN does not indicate any sale of the said castings, the notice only alleges, not following the procedure of undertaking of Notification No 214/86 and Rule 57F(3).Therefore, the goods were to held to be cleared at exigible rates under Notification No 1/93. However, the Commissioner (Appeals) confirmed the violation of procedure of Rule 57 F (3) and of non-compliance of Notification No 214/86 in as much,as an undertaking was not given, he has not given any reasons why the benefit of Notification No 87/94 & Boards instructions are not eligible to these goods. The order of duty of Rs 39,394/- on these is therefore not upheld.
(b)As regards goods in appeal E/426/97, there is no charge and or evidence in the Show Cause Notice of the sale, to the alleged 10 customers, as found by the Commissioner (Appeals), the charge in the notice is-
“….In their declaration under the said notification some branded new castings were cleared directly to the original equipment manufacturer while some new castings were cleared to intermediate persons (processors) who do the machinery on the goods cleared by the assessee and in terms supply it to the original equipment manufacturers,…”
There is no admission or and finding, about the sale to alleged 10 customers in the Order-in-Original.It is therefore not understood how the Commissioner (Appeals)is coming to a finding to “Trade in Castings”. When a Brand name original equipment manufacturer is admittedly getting the castings made with his ‘Brands’ on them and is supplying the samples, patters, etc.and some parts of the goods are admittedly supplies directly back to them, there-routing through a processor for machining only in same case cases, since proof machining facility, as required on such castings was not admittedly available with the appellants as pleaded, does not enthuse us to come to a conclusion that there was `trading in such parts or castings’ supplied via processors i.e. proof machiners.The benefit of Notification No 87/94 could therefore not be denied, due to such a route of proof machiners as undertaken, when we read the Boards instructions relied upon by the learned Advocate.We find no reason therefore to uphold the demand in appeal No E/426/97/
(c) When we find no reason to uphold the demands we find no reason to call for a penalty under Rule 173Q of Rs 500/- as arrived at.
8. In view of our findings, the impugned order is set aside and appeals are allowed.
(Pronounced in the court on 22/5/2001)