TMI Blog2018 (1) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... ater on being found to be defective was re-exported, Cenvat credit of the additional customs duty earlier taken would be reversible and the Tribunal in para 8 of the judgment after considering the Delhi High Court judgment in the case of Asahi India Safety Glass Limited v. Union of India [2004 (9) TMI 118 - HIGH COURT OF DELHI] held that such components have to be treated as having been used and hence the assessee cannot be asked to reverse the cenvat credit. Surplus inventory which was re-exported - components written-off - demand of duty - Held that: - admittedly these components have not been used for the manufacture of the finished products and, therefore, in our view the Department is justified in invoking Rule 8 of the 1996 Rules for recovery of duty. Therefore, the duty demand of ₹ 23,15,901/- & ₹ 94,29,117/- have to be upheld. Duty Drawback - Held that: - Since the components in respect of which the duty demand of ₹ 94,29,117/- has been confirmed have been re-exported, the customs authorities have to consider the appellants’ claim for duty drawback - penalty not sustainable. Appeal dismissed - decided in favor of respondent-assessee. - D.B. Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Article Code, Function description, Quality, S. No. and reason of rejection. On the basis of MRF they filed the claim online to Ericsson Sweden and other suppliers and when the claim is accepted by them these faulty components were re-exported to the supplier. It was also found that either they received credit note in respect of faulty components after acceptance of claim by the M/s. Ericsson Sweden or they received free replacement of the re-exported faulty components. During the visit, officers of this division on 30-11-2009 it was also detected that apart from the re-export of the faulty components the unit also re-exported the fresh components without being issued to the assembly floor. During the visit the invoice Nos. 237, 238 both dated 5-12-2007 invoice No. 56, dated 30-7-2009 and invoice No. 99, dated 23-8-2009, etc., were pointed out to them wherein the imported components which were imported under concessional rate of duty under Notification No. 24/2005-Cus., dated 1-3-2005 as amended, were re-exported as such and were not faulty and no information in this regard was provided to the department during their visit dated 31-8-2009 nor in their letter vide dated 19-11-2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return to the supplier, the same defective inputs cannot be said to be issued in the assembly line of manufacturing process of final product. B. That on going through the facts as mentioned in Para 13 of OIO No. 58/2012 (CE) - Commr., dated 28-9-2012, pertaining to the earlier appeals decided by the Tribunal vide its Final Order Nos. A/53407-53408/2014, dated 21-8-2014 (which are reproduced hereunder for ready reference), it transpires that supplier was under obligation to replace only those inputs which contain manufacturing defects and therefore it is obvious that inputs damaged during the process of manufacture cannot be returned meaning thereby that the inputs in question were returned before putting them into use for manufacture of final products. Para 13 of O-I-O No. 58/2012 (CE) - Commr., dated 28-9-2012 : The above referred facts indicated that the supplier gives the warranty or replacement only in respect of those components/spare parts which has been sent to the M/s. Ericsson India Pvt. Ltd., and had any manufacturing defect/technical defects. This also means that these components could not be used in the manufacture of finished products as they had manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of final products the defects were noticed during inspection : therefore, it is a case of removal of input as such 2. Shree Rajasthan Syntex Ltd. v. CCE, Jaipur - 2012 (280) E.L.T. 470 (Del.) [Para 8 at Page 6, S. No. (2) of (sic) order]. Ratio : Removal of old used capital goods not treatable as removal of capital goods as such. Distinguishable on the facts as instant case is neither related to removal of capital goods nor removal of inputs after putting into use. 3. Shree Rajasthan Syntex Ltd. v. CCE, Jaipur - 2012 (282) E.L.T. 550 (Del.) [Para 8 at Page 6 S. No. (3) of (sic) order]. Ratio : Removal as such meaning removal of goods from premises after availing credit without putting into use or usage for small duration. This appears to be in favour of Revenue as in the instant case the defects were noticed during inspection of inputs i.e. before putting the inputs in manufacturing process for manufacture of final products, therefore, it is a case of removal of input as such. That in view of the above the judgments relied upon by the CESTAT in favour of the assessee have no bearing to the facts of the present matter and the impugned order deserves to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Asahi India Safety Glass Ltd. v. Union of India reported in 2005 (180) E.L.T. 5 (Del.) wherein it has been held as under :- 29. As indicated earlier, when the float glass in wooden boxes is received and on opening if the glass is found broken, the same is rejected. The Commission has misdirected itself in arriving at a conclusion that the glass having defects after having been cut, beveled and washed are inspected and at that stage the goods are segregated. The applicant is not entitled to Modvat credit. It may be that from one sheet six pieces are to be manufactured as safety glass and if in a portion where bubble is noted it does not mean that five glass pieces cannot be manufactured. Before lamination the 6th piece which may be defective will be left out. From this it cannot be said that the entire sheet of glass was not under process of manufacture. Cutting, marking, breaking, grinding and washing with de-mineralised water, are different stages of manufacturing process. If the float glass is not found defective the same is cut into pieces of required sizes and is marked as per requirements of customer. It is thereafter extra portion or unwarranted portion or a glass piece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the order of Settlement Commission is contrary to the provision of the Income-tax Act and if so and whether it has prejudiced the petitioner. This of course, apart from the ground of bias or malice which constitute an independent and separate category. At page 622 the Court after examining the scheme in detail has pointed out that it is true that finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or Article 136 as the case may be . The Court also examined that the order of Commission is in the nature of package deal and it may not be possible to dissect its order and that the assessed should not be permitted to accept what is favourable to him and reject what is not. It was also argued before the Apex Court that the Commission is not even required or obliged to pass a reasoned order. The provisions contained in the Income-tax Act in so far as Settlement Commission is concerned, are pari materia to the provisions contained in the Central Excise Act. 34. The Apex Court pointed out that in this context it is relevant to note that the principle of natural j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ericsson company has not used the product and without using it re-exported, thus they could not have claimed the double benefit. 9. Counsel for the respondent has relied on the judgment rendered by the Supreme Court in the case of Union of India v. Asahi India Safety Glass Ltd. (2015) 11 Supreme Court Cases 451 = 2015 (320) E.L.T. 179 (S.C.) = 2017 (50) S.T.R. 122 (S.C.) wherein the Supreme Court has observed as under :- 12. On that basis the High Court has concluded that the Commission committed an error by applying the wrong principle in law, by treating even the float glass used for manufacture, that is, after the manufacturing process had commenced, to be a wasted input and came to an erroneous conclusion that MODVAT could not be claimed in respect of that part of a particular float glass sheet. In forming this opinion the High Court relied upon the judgment of this Court in CCE v. Rajasthan State Chemical Works, wherein this Court is to when the manufacturing process starts. The final portion from the said judgment which is quoted by the High Court, is reproduced for proper understanding of the matter : 13. Manufacture thus involves series of processes. Process in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise, U.P. - 2012 (276) E.L.T. 153 (S.C.) 4. Tata Engineering Locomotive Co. Ltd. v. Central Excise, Pune - 2010 (256) E.L.T. 56 (Bom.) 5. Commissioner of Central Excise v. Raj. Spinning and Weaving Mills Ltd. - 2010 (255) E.L.T. 481 (S.C.) 6. Maruti Suzuki Ltd. v. Commissioner of Central Excise Delhi - 2009 (240) E.L.T. 641 (S.C.) 7. Collector of Central Excise v. Solaris Chemtech Ltd. Ors. - Civil Appeal Nos. 6465-6475 of 2001. 11. We have heard counsel for the parties. 12. While considering the matter, the tribunal has observed as under :- 7. The duty demand of ₹ 1,71,07,253/- is in respect of the components which had initially been issued for use in the manufacture and were used for assembly of the finished product but on testing the same were found to be defective and hence were taken out and subsequently re-exported. According to the Department, these components have not been used for manufacture of the finished goods and hence invoking Rule 8 of the 1996 Rules, this duty has been demanded. In terms of Rule 8 of 1996 Rules the Assistant Commissioner/Dy. Commissioner shall ensure that the goods imported are used by the manufacturer for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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