2003 (11) TMI 417 - AT - Central Excise

Summary

Issues: Duty demand under Rule 57-I of Central Excise Rules, disallowance of Modvat credit for duty paid on inputs, imposition of penalty under Rule 57-I(4) and Rule 173Q(1)(bb).

In the judgment, the Appellate Tribunal CESTAT, Mumbai addressed the duty demand of Rs. 38,36,207 under Rule 57-I of the Central Excise Rules and the penalty imposed on the appellants. The Commissioner (Appeals) confirmed the duty demand and penalty, disallowing Modvat credit to the manufacturers of motor vehicle parts. The disallowance was based on the assertion that no manufacturing process occurred at the registered premises or any other claimed factory, leading to the availing of Modvat credit without the inputs being used in the manufacture of final products.

The Tribunal considered the appellants' case where they received duty paid inputs, carried out inspections, and sent them to job workers for conversion into motor vehicle parts. The processed goods were returned to the appellants without duty payment, who then paid duty on these goods and took credit for the duty paid on the inputs. Referring to a previous Tribunal order, the Tribunal found that credit was admissible in similar circumstances. Since duty was paid on the final products cleared from the factory, the Tribunal saw no reason to deny the credit for duty paid on inputs. Consequently, the Tribunal waived the pre-deposit of duty and penalty, staying the recovery pending the appeal.