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2020 ] COMMR. OF C. EX., NAGPUR v. UNIVERSAL FERRO & ALLIED CHEMICALS LTD. 17

at its site at Maneck Nagar. Rest of the raw materials and consumables i.e.
Quartzite, Charcoal, Carbon paste, Dolomite, Fluxes, Refractories and Trans-
former Oil required for the conversion of Manganese Ore/Coke into Silicon
Manganese for TISCO was to be used by UFAC from their own purchases ob-
tained under CT-3 as and where applicable. As per the agreement, UFAC was to
charge job charges to TISCO at the rate of Rs. 14,090/- per metric tonne (“PMT”
for short) which was inclusive of cost of material added by UFAC. The job work
charges were to be recovered from TISCO on commercial invoices. In the invoic-
es, Silicon Manganese was to be charged at the rate of Rs. 20,623/- PMT which
also included cost of ingredients supplied by TISCO. The said invoices were pre-
pared under erstwhile Rule 100E of the Central Excise Rules.
5. The activities of the UFAC had come to a standstill for some period
and it re-started its production in August, 1999 and was declared a sick company
by the Board for Industrial and Financial Reconstruction (BIFR) under the provi-
sions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). It is
not in dispute that the UFAC carried out conversion of the raw materials sup-
plied by TISCO, on TISCO making the payment of conversion charges of Rs.
14,090/- PMT of Silicon Manganese. However, while dispatching the Silicon
Manganese to TISCO, Excise duty was paid on the value of Rs. 20,623/- PMT
which included cost of raw materials supplied by TISCO as well as the inputs
used by UFAC from their own purchases.
6. The Commissioner, Central Excise & Customs, Nagpur, issued a
show cause notice to the UFAC dated 9-10-2001 in respect of the Silicon Manga-
nese cleared during September, 2000. It was stated in the said show cause notice,
that the Circular No. 67/98-Cus., dated 14-9-1998, issued by the Central Board of
Excise & Customs, New Delhi (hereinafter referred to as “the Board”) had per-
mitted the EOUs to undertake job work on behalf of a DTA unit only in textile,
readymade garments, agro-processing and granite sectors and by another Circu-
lar No. 74/99, dated 5-11-1999 the said facility was extended to EOUs to under-
take job work on behalf of a DTA unit in aquaculture, animal husbandry, elec-
tronics hardware and software sectors. The show cause notice therefore stated,
that the sector in which respondent-Assessee had carried out the job works was
not covered by either of the Circulars and, as such, the said job works were in
violation of EXIM Policy. The show cause notice called upon the respondent-
Assessee to show cause, as to why the said Silicon Manganese should not be
charged to full Central Excise duty as per the proviso to Section 3(1) of the Cen-
tral Excise Act, 1944 (hereinafter referred to as “the Act”) by denying the benefit
of Notification No. 8/97, dated 1-3-1997 (hereinafter referred to as “the said Ex-
emption Notification”).
7. The show cause notice also called upon the UFAC to show cause, as
to why the central excise duty amounting to Rs. 23,08,443/- short paid on Silicon
Manganese cleared in DTA during September, 2000, should not be recovered
under Section 11A of the Act. It also called upon to show cause, as to why the
goods i.e. 296 MT Silicon Manganese valued at Rs. 61,04,408/- cleared in DTA
during the aforesaid period (i.e. September, 2000) should not be held liable for
confiscation. The said show cause notice also required to show cause, as to why
penalty should not be imposed on the UFAC under Rule 209 of the Central Ex-
cise Rules, 1944 read with Section 38A of the Act.
8. In all, ten (10) show cause notices of various dates, last being 2-12-

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