ORDER
Moheb Ali M., Member (T)
1. M/s. Rajesh Industries manufactured Flywheels for Diesel Oil Engines during the material time. The material required for such manufacture was supplied by another unit M/s. Lalkrupa Castings. Once the flywheels are manufactured they were sold to Diesel Oil Engine manufacturers by M/s. Lalkrupa Castings to whom the flywheels were returned by M/s. Rajesh Industries. The latter did not have a Central Excise registration nor did it file any declaration in respect of goods manufactured in the unit. Invoking the extended period, Rs. 1,70,087.27 was demanded, towards duty on the manufactured goods an equal amount of penalty of Rs. 50,000/- was imposed on the unit under Rule 173Q and a penalty of Rs. 10,000/- on the partner of M/s. Lalkrupa Castings. In appeal the Commissioner confirmed the order of the lower authority. Hence this appeal.
2. Heard both sides.
3. The period of dispute is April, 1992 to March, 1993. The evidence as brought out in the Order-in-Original suggests that the appellant unit was manufacturing flywheels out of the castings supplied by M/s. Lalkrupa Catings. The final product was supplied to the Diesel Oil Engine manufacturers. Evidence was tendered to this effect. Parts of diesel oil engines are exempt from payment of duty under Notification No. 217/85-Central Excise. The appellants raised this contention before the appellate authority. The appellants relied on the decision of the Supreme Court in the case of Thermax wherein the court held that the benefit of a notification cannot be denied on the mere plea that the procedure laid down in Chapter X of Central Excise Rules is not followed so long as the end user is registered and the goods have been used for the purpose specified in the notification. In the present case the appellant produced evidence to say that the end user is a manufacturer of Diesel Oil Engines and that he received the impugned flywheels manufactured by M/s. Rajesh Industries. It is also brought out that the flywheels were used in the manufacture of Diesel Oil Engines. The Commissioner’s contention that the appellant was not registered with the Excise authority and therefore that the goods in question became dutiable even when the end-use is satisfied, cannot be accepted. The original authority rejected the evidence produced by the appellant that the goods manufactured by them were used in the manufacture of Diesel Oil Engine on the ground that the documentary evidence so produced was not attested. This is hardly a ground to reject the evidence. Any evidence produced by an assessee can be subjected to verification. Having not done so the original authority should not have rejected the evidence produced.
4. The Commissioner decided the issue before him on a very short point and that is, the manufacturer of flywheels were not registered with the Central Excise authorities and therefore the goods produced by him will attract duty even when they are used in the manufacture of Diesel Oil Engines. This cannot be upheld in view of the decision of the Hon’ble Supreme Court in the case of Thermax cited supra. It would have been entirely different had the end user was not registered with the Central Excise authorities. In these circumstances we hold that the parts manufactured on a job-work basis were ultimately used in the manufacture of Diesel Oil Engines and are therefore eligible for the benefit of exemption Notification No. 217/85.
6. The appeal is allowed the order of the Commissioner (Appeals) is set aside.
(Operative part pronounced in court)