TMI Blog1997 (10) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissioner of Central Excise Customs (Appeals), Pune captioned above. The appellants manufacture Nuts and Bolts, they supplied certain quantities of bolts to a customer M/s. Kirloskar. These were rejected and returned by the customer because on defects and the customers sent it back to the appellants on payment of duty thereon, as if it is their [own] manufacture in terms of Rule 57F(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for Modvat credit. 3. Shri D. Gurnani the ld. JDR contended that there are two decisions of the Tribunal contra in the case of Bharat Gears v. Commissioner of Central Excise, Mumbai 1996 (87) E.L.T. 668 (Tribunal) and in the case of ICI India Ltd. v. Commissioner of Central Excise, Calcutta 1997 (89) E.L.T. 216 (Tribunal). In both these decisions the Tribunal has held that defective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion therefore the operation undertaken on the returned goods on the appellants factory is only removal of defects which does not amount to manufacture. The fundamental rule of Modvat credit is that it is given on the duty paid on inputs which are used in or in relation to the manufacture of finished product. When this element is absent in the situation as such in the present case of the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lower authorities is sustainable and it is upheld. However, the ld. Consultant has also pleaded that in any case the penalty on the appellant Rs. 1,000/- on the appellant is not justified. One is inclined to agree with this contention, because the matter revolves round a question of interpretation of Rule 57F(1). Therefore the penalty on the appellant is set aside. The appeal is disposed of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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