TMI Blog1995 (9) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... e following inputs for the manufacture of fuel tanks and struts which are used in the manufacture of motor vehicles : Inputs of fuel tank : (a) Fuel level Gauge OMNI (b) Fuel level Gauge 1000 CC (c) Fuel level Gauge Gypsy (d) Gauge Assy. Fuel Level 800 CC (e) Wire Como. Fuel Level Car Inputs of Struts (a) Spring Front Coil (for van strut) (b) Spring Front Coil (for van strut) (c) Stearing Knuckle (for van strut) Since the appellants do not possess any in-house facility for manufacture of fuel tanks and struts, the inputs were supplied to the following persons for conversion into fuel tanks and struts : (i) M/s. Mark Auto Industries Ltd., Gurgaon (ii) M/s. Gabriel India Ltd., Gurgaon (iii) M/s. Munjal Showa Ltd. Gurgaon These persons either manufactured the other inputs for the fuel tanks and struts within their own factories or purchased the other inputs from outside and manufactured the fuel tanks and struts and cleared them to the appellants on payment of duty. For the clearance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r vehicles cleared by the appellants on payment of duty and hence Modvat credit had been rightly availed. They also filed affidavits by the vendors to substantiate their contention that the vendors had not taken Modvat credit on the inputs supplied by the appellants. The adjudicating authority confirmed the various demands, holding inter alia that fuel tanks and struts are not intermediate products, but final products in themselves and hence Modvat credit was not available on them and further holding that the appellants did not possess necessary permission to clear the inputs as such for the manufacture of intermediate products. Hence these appeals. 4. Learned Counsel, Shri V. Sridharan submits that as far as the appellants are concerned, the motor vehicles are the only final product for the manufacture of which they hold a Central Excise licence and fuel tanks and struts are intermediate products. They are essential vehicle ingredients and component parts of the motor vehicles which are complete only with the fitment of the same. No motor vehicle is marketable without fuel tanks and struts. He relies upon the decision of the Larger Bench of the Tribunal in the case of Ashwin Van ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants for issue of inputs to their vendors, reference to RSIV No. in their RG-23A Part I register, receiving report of one of the job worker viz. Gabriel India and the price list of Gabriel India from which it is evident that the basic excise duty was paid on (Gabriel s selling price + cost of their component supplied by the appellant) to support his stand that the inputs admittedly were used for the purpose of manufacture of fuel tanks and struts and intermediate products were returned to the appellants. There is no dispute that the job workers did not avail of Modvat credit on the fuel tanks and struts, and hence it is not a case of double benefit being availed of. On the objection raised by the Department that the challans were not preauthenticated, he draws our attention to the letter dated 26-12-1988 of the Assistant Collector dispensing with the requirement of preauthentication of 57F(2) challans. He, therefore, submits that the appellants have substantially fulfilled with the requirement of Rule 57F(2) and are entitled to the benefit of Modvat credit, in accordance with the decisions inter alia of the Tribunal in the case of Facit Asia reported in 1991 (54) E.L.T. 347 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id on raw materials out of which the input in question viz. aluminium castings emerged on the ground that the item which qualifies as input under Notification 177/86-C.E. is one which is to be reckoned for the purpose of considering Modvat credit which item in that case had been cleared without payment of duty on account of exemption Notification. Regarding the objection of the DR that the appellants had not fulfilled the conditions laid down in Notification 214/86, he invites our atten tion to the impugned order where the Collector has categorically stated that the Department is not seeking to deny Modvat credit on inputs for the reason that the job workers had paid the duty on the intermediate products. 8. We have heard both sides and carefully considered the rival submissions. Fuel tanks and struts constitute essential parts for a motor vehicle and the manufacture of a motor vehicle is complete only with the fitment of these two items. Hence, they would constitute intermediate product as far as the appellants are concerned, and the motor vehicle is the final product for the appellants who hold industrial licence for manufacture of motor vehicles. The finding of the adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el tanks and struts are indeed intermediate products for the appellants. 9. The decision in UMS Radio Factory P. Ltd. v. C.C.E. (supra) relied upon by the learned DR is distinguishable : In that case the assessee received in his factory aluminium alloy castings purchased directly from the manufacturers and which were not accompanied by any duty paying documents. These castings were wholly exempt from duty by a Notification because they had been manufactured out of duty paid aluminium ingots. These castings had been used by the assessee within his own factory. The assessee had sought to take Modvat credit on deemed basis without production of duty paying documents based on the orders issued by the Central Government under second proviso to Rule 57G(2) in respect of the quantity of aluminium castings received in his factory. The assessee argued that the aluminium ingots from which the castings have been made, have paid duty, and, therefore, they must be extended the Modvat credit on deemed basis of that duty paid on ingots, though they have received only castings in their factory without production of duty paying documents. In that context the Tribunal rejected the assessee s cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have permission to clear the inputs as such for manufacture of intermediate products. (b) they have not followed the procedure for movement as indicated in the Trade Notice reported in 1986 (25) E.L.T. T43 i.e. issue of different coloured challans in triplicate. Serial machine numbering of sets of pages, pre-authentication of each page of the challan book by the Proper Officer and each consignment to the outside factory being sent with the original and duplicate challans. (c) issue of the appellants own Material Delivery Notes which have not been authenticated by the Proper Officer and (d) non-maintenance of accounts by appellants or job workers in the proforma prescribed in the trade notice. On a perusal of the relevant records, we are satisfied that the appellants have substantially complied with the procedural requirements of Rule 57F(2). Vide letter dated 17-7-1987, the appellants had requested the Asst. Collector for general permission under Rule 57F(2). The letter reads as under : Letter No. PUR/C. EX/57, dated 17th July from Maruti Udyog to the Asst. Collector, Central Excise, Rohtak Sub : Request for general permission under Rule 57F(2) Kindly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate procedure for the purpose of issue of material to the vendors/job workers and return of the intermediate products by the job workers. An internal document called RSIV is generated in the computer which gives the description of the part, its part No. and quantity. For instance the document at page 1 of the paper book bears No. 9394047 and is dated 16-4-1993. This in turn refers to a No. G 0138 which has been explained to us as the number of Material Delivery Note against which the material is removed and delivered from the factory. This Material Delivery Note G 0138, dated 20-5-1993 appears at page 2 of the paper book and duly gives the reference of the RSIV No. 9394047. This MDN is duly recorded in Form RG-23A Part I relating to issue of inputs. Sl. No. 11 of this RG-23A Part I at page 3 of the paper book gives the RSIV No. date and the quantity against which the material has been issued. On receipt of the material, the job worker viz. Gabriel India Ltd. have prepared a Receiving Report (page 6 of the paper book) once again referring to the MDN No. 138 of the appellants against which the material was received. This is also duly recorded as receipts in Form IV maintained by Gab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not utilised for purposes other than the one covered under the Modvat scheme. In view of the fact that permission has been subsequently granted, to reject the plea of benefit of Modvat, on the ground of procedural lapses would be defeating the purpose of the Rules which have been legislated to provide substantive relief by way of provision of credit of the duty on inputs to reduce the financial burden on a manufacturer. The same view has been expressed by the Tribunal in the case of CCE v. Roshan Tin Printers reported in 1994 (74) E.L.T. 325 and India Paper Pulp v. CCE reported in 1994 (73) E.L.T. 601. 12. The submission of the learned DR that since the manufacturers of fuel tanks and struts (i.e. vendors of the appellants) have paid duty on them instead of availing the benefit of Notification 214/86, the appellants are not entitled to the facility under Rule 57F(2) is not correct, in view of the decision of the Tribunal in the case of Facit Asia Ltd. v. CCE reported in 1991 (54) E.L.T. 347, wherein the Tribunal held that : So far as the appellants are concerned, they have gone through the necessary drill as prescribed under Rule 57F(2) in regard to sending the goods to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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