TMI Blog1999 (9) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... and during the course of scrutiny of records it was noticed that the appellants had been availing Modvat facility since 1-3-1986 on tyres, stereos and air conditioners. Investigations in the matter revealed that the appellants during the years 1986-87, 1987-88, 1988-89 and 1989-90 had shown more consumption of the above inputs than the quantity actually consumed in the vehicles produced during the year. It was estimated that the appellants had availed Modvat credit to the extent of Rs. 1,11,92,308/-. Shri A.K. Jain, Manager (Finance) when asked to explain, he in his statement recorded on 18-6-1990 stated that the difference has been worked out on the basis of the standard consumption i.e. at a rate of five tyres in each Maruti Vehicle, one stero in each DLX Maruti vehicle and one air conditioner in each DLX Maruti vehicle and AC Maruti vehicle. Shri Jain stated that inputs damaged in the manufacturing had not been considered and that reversal of Modvat credit was not required if the inputs were damaged in the manufacturing process, it was stated by him that inputs were supplied by vendors; that the inspected quantity of the components was accounted for in their PCL; that the input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that necessary permissions for following this procedure has been obtained that whenever these rejected goods are sent to the supplier for repair and return, Challan under Rule 57F(2) is prepared; that after the goods are issued to the shop floor the noticee gets what is known as Line Rejection ; that these Line Rejections are of two types; that the first type is known as line rejection on account of material defect or vendor fault which would mean that the supplier will undertake the responsibility of repairing the said goods even though on receipt they were accepted and the defect was found out only while using the same in shop floor during the process of manufacture. It was pointed out that second category is the input which became defective because of the wrong handling by the workers; that these rejections could not be repaired by the suppliers; that these are accumulated as waste/scrap and destroyed periodically after getting the necessary permissions. The Commissioner after taking into consideration of the submissions made concluded that this demand involved three major issues and on each issue decided as under : (1) whether the consumption of inputs is more than what wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant s prayer before the Collector for supply of worksheet and for reconciliation of figures was not acceded to by him on the ground that Annexure I to the show cause notice giving the total receipt of the inputs was sufficient and there was no further requirement to give the break up of the monthwise figures of receipts of inputs. However, we find that such worksheet has subsequently been given by the Asstt. Commissioner to the appellant i.e. after the adjudication was complete by the Collector. As the appellant is contesting the genuineness of the figures taken by the Department as their total receipts of the inputs, we find that a reconciliation of the same is required by looking into the R.G. 23A Part I register. The hestitation on the part of the Asstt. Commissioner to do so when the matter is pending before the Tribunal is understandable. Accordingly, we think it to be a proper case for remand to the lower authorities so as to enable both, the appellant and the Department to reconcile the figures and to recalculate the demand of duty if any. Accordingly, we set aside the impugned order as far as the same relates to confirming of the demand of duty of Rs. 1,11,92,308/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department to prove that Modvat has been taken on each input before confirming the demand which was not discharged by Revenue. The Counsel submitted that there were arithmetical mistakes in calculating the total quantity from R.G. 23A Part I. He submitted that the reconciliation of the figures was thus essential. 8. In reply to the above contentions Shri Sanjiv Srivastava, the Ld. DR submitted that a joint effort was made to reconcile the figures of tyres and air conditioners issued and used in the vehicles manufactured. For this purpose, he submitted that physical stock at the beginning of the year was taken, receipts during the year were added, actual consumption (number of vehicles) quantity of inputs per vehicle was computed, quantity of inputs which were not accounted for was arrived at. From this the quantity of inputs which were termed as line rejection was subtracted and net unaccounted quantity was arrived at. He submitted that the total duty involved comes to Rs. 62,74,754.693. The Ld. DR however, concedes that there were 1500 tyres which were taken twice against invoice No. 18/86 in R.G. 23A Part I. Relevant R.G. 23A Part II was not available and hence the entry whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os comes to Rs. 62,74,754/-. He submitted that this includes the duty on 1500 tyres which were accounted for twice in R.G. 23A Part I. He, however, submits that there was no corresponding entry verifiable in R.G. 23A Part II as Part II records were not available. He submits that duty on account of various inputs found short on physical verification has been recalculated which comes to Rs. 4,44,460/-. He submits that the appellants have claimed line rejections. He submits that line rejections are in respect of tyres, airconditioners and stereos. He submits that the appellants were not purchasing fully assembled items but were getting kits i.e. semi-assembled components and therefore, the damage, if any, could be only to the component or part of the kit and not to the entire kit itself. He submits that the appellants have been sending the goods for repair, remaking and the goods might have been received back in terms of the provisions of Rule 57F. Ld. DR also submitted that what was being damaged was input itself that Rule 57D speaks of the inputs contained in the damaged final product or waste. He submits that per se, the airconditioners, stereos and tyres damaged do not come within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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