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2006 (12) TMI 326 - AT - Central ExciseCenvat/Modvat - finished goods - Demand - duty-paid inputs - extended period of limitation - manufacture of motor vehicle parts - HELD THAT:- The fact that processes such as broaching etc. were undertaken on ROFs and turning and drilling were undertaken in relation to GSDs, is amply borne out from the production log books of the relevant periods which indicate the nature of the manufacturing process as well as the machine on which it was done and the operators ‘names, as also the quantity of the GSDs and ROFs subjected to such processes. It is not disputed that these production log books were before the Revenue authorities. There was no reason to discard such contemporaneous documentary evidence which indicated the manufacturing process of broaching, drilling, turning etc. on ROFs by simply relying on the bald statement made on the spur of the moment by the authorised representative of the appellant. It is nobody’s case that production log books have been subsequently prepared. The particulars mentioned therein which are brought to our notice clearly speak of manufacturing process to which ROFs (semi-finished) and GSD (castings) were subjected to. Unfortunately, this important documentary evidence has been overlooked by the learned Commissioner. It will also be noticed from Section Note 6 of Section XVI of the Schedule to the Tariff Act that in respect of the goods covered by Section XVI (machinery and mechanical appliance etc.) conversion of an article which is incomplete or unfinished but having essential characteristic into complete or finished article shall amount to manufacture. Assessee had satisfactorily established the nature of manufacturing processes to which these two items had undergone before they were removed on payment of excise duty on the value added basis, it is also not disputed that the total amount of excise duty paid was much higher than the Modvat credit availed in respect of these items. In the present case, admittedly by the excise duty paid on the ROFs/GSDs removed as finished goods was higher than the Modvat credit availed on these inputs. Therefore, there was no liability to pay additional duty when these goods were removed. Even if it were to be held that no process was undertaken on these goods, then obviously there was no liability to pay excise duty on the footing that these goods were manufactured by the appellant, because if they were already brought as inputs from other manufacturer and no further process was undertaken, they would obviously be not liable for payment of excise duty on the ground that manufacturing process was undertaken. Therefore, in either event, no duty liability arose on the part of the appellant. The facts would also indicate that since the amount higher than the Modvat credit availed was paid by way of excise duty, then there could no intention to evade payment of duty. Obviously, therefore, there was no valid ground for invoking the extended period of limitation. Thus, the impugned order cannot be sustained and is hereby set aside. The appeal is accordingly allowed.
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