Per Shri V.P. Gulati :

This appeal is against the order of the Collector of Central Excise, Bangalore. Under the impugned order the appellants have held to have been evaded duty in respect of the forgings which had been manufactured on job work basis. The appellants are manufacturers of forgings on their own account as also on the account of others out of the raw materials supplied by them. The appellants had got their classification list approved both in respect of the goods manufactured by them out of their own raw materials as well as in respect of the goods manufactured on job work basis. The appellants in respect of the goods manufactured on job work basis claimed benefit of Notification 214/86 and the classification list based on that was approved. The appellants however did not follow the procedure as envisaged under Notification 214/86 as their customers got the work manufactured on job work basis was not operating under the MODVAT Scheme for the benefit of Notification 214/86 had been issued.

2. The learned Consultant for the appellants has pleaded that the appellants were law abiding and to establish their bonafides they paid duty as was demanded and thereafter only contested the demand. He pleaded that while he is not disputing the duty liability on the forgings his plea is that the demand is barred by limitation. He has urged that the appellants were on record in regard to the goods which were manufactured on job work basis and had been submitting the invoices under which the goods were sent to the customers along with RT 12 returns. He has therefore pleaded that the Department was fully kept informed about their operations on job work basis and removal of the goods without payment of duty. He has therefore pleaded that the longer period of limitation should not have been invoked. In this context he has cited the decision of the Hon'ble Supreme Court in the case of Collector of Central Excise Vs. H.M.M. Limited reported in 1995 (75) ELT 497, Cosmic Dye Chemicals Vs. Collector of Central Excise reported in 1995 (75) ELT 721= 1995 (6) RLT 333 (S.C.) and the decision of the Tribunal in the case of Engineering & Commercial Agencies Ltd. Vs. Collector of Central Excise, Madras reported in 1996 (82) ELT 295 = 1996 (13) RLT 716 (CEGAT-SRB). The plea is that since there was no malafide involved on the part of the appellants and the appellants were on record as to the clearances made without payment of duty no intention to evade payment of duty can be read from this context. In the alternative he has pleaded that the value adopted for arriving at the assessable value was not correct in as much as notional profit margin of 10% had been added to the value of the raw materials and the job charges charged and warranted. In that view he has pleaded that the order to this extent will have to be set aside. He has also prayed alternatively for reduction in the penalty levied. He has pleaded that in the facts and circumstances of the case confiscation of plant and machinery was not warranted.

3. Heard the learned JDR Shri S. Arulswamy. He has pleaded that the RT 12 returns were filed in respect of the goods manufactured by them on their own account out of their own raw materials and in respect of which the duty was paid and the clearances made on job work basis were not reflected in the RT 12 returns. He has pleaded mere filing of invoices cannot be taken as substitute for filing of RT 12 returns. He has further pleaded that the appellants were availing the benefit of Notification 214/86 when they were not eligible for the benefit of the said notification as the inputs received by the appellants were not in terms of the provisions of MODVAT Scheme as under Rule 57F (3).

4. In a rejoinder the learned Consultant has pleaded that the figures of job work done were not required to be reflected in the RT 12 returns in view of the procedure prescribed at the relevant time.

5. We have considered the pleas made by both the sides. We observe