The company manufactures tyres and tubes at its plants at Bhandup (Mumbai) and Nashik, for which various raw materials, including nylon tyre cord fabric (NTCF), are purchased. The fabric is rubberised, ie, dipped/calendered at its plant, as per its own technical specification and thereafter used captively in the manufacture of tyres.

According to the company, as the Nashik plant does not have the facility for dipping the fabric, the process is carried out at the Bhandup plant on a job work basis.

Goods processed on job work are exempt from excise duty. According to Ceat, declarations were filed with the jurisdictional excise authorities on this.After the fabric is dipped at the Bhandup plant, the same is sent to Nashik by following the relevant central excise procedures and the Nashik plant, on the receipt of the fabric, availed itself of the modvat credit on inputs on the basis of excise invoices.

The company claims that "both the Bhandup and Nashik plants have maintained the prescribed central excise records" and these have been audited. The company, therefore, has contested the excise department's notice on duty evasion.