TMI Blog2005 (12) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... them during the period in dispute and then adjust the amount of credit disallowed against the excess duty, if any, paid on the value of motor vehicle/chassis by such inclusion, and recover the difference. He shall pass fresh orders after extending reasonable opportunity of hearing to the assessee and allowing them to place documentary evidences on record to substantiate their contention in this regard. It is open to the respondents to agitate the issue of wrong quantification of credit before him. As regards penalty, we see force in the submission of the respondents that since the issue is entirely one of interpretation of law, it is not a fit case for imposition of penalty, and therefore, reject the prayer of the Revenue for restoration of the penalty imposed upon them by the Adjudicating Authority. The appeal is partly allowed as above - Cross Objection is also disposed of accordingly. - HON'BLE JYOTI BALASUNDARAM, VICE PRESIDENT AND MOHEB ALI M., MEMBER (T) For the Appellant : Ajay Saxena, SDR For the Respondent : V. Sridharan, Adv Order Jyoti Balasundaram, Vice-President 1. In this case, 8 show cause notices were issued to the assessees respondents who are engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of motor vehicle, was referred to jurisdictional High Court and therefore, there was no finality in the Bajaj Auto Ltd. case, and confirmed the demand raised in the notices by disallowing the Modvat credit. He also imposed penalties totalling Rs. 8,70,000/. The Commissioner (Appeals) set aside the adjudication order, following the decision of the Larger Bench of the Tribunal in Bajaj Auto Ltd. v. CCE, Pune [1996 (88) E.L.T. 355] in which it was held that modvat credit was admissible on jack assemblies and tool kits supplied along with motor vehicles as they are inputs within the meaning of Rule 57A of the Central Excise Rules, 1944; hence this appeal by the Revenue. 2. We have heard both sides. We note that in the case of the same assesses, the Hon'ble Patna High Court has disallowed modvat credit on tool kits observing clearly that - Para 19: The motor vehicle chassis cleared without tool kits is also manufactured and duty is paid thereon. Definitely, therefore the motor vehicle chassis are treated to be manufactured within Section 2(f) whether or not tool kits are supplied along with the motor vehicles. Again tool kits supplied with the motor vehicle chassis do not pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E [2001 (135) E.L.T. 596] wherein it was held that the decision of the Larger Bench in Bajaj Auto Ltd. supra can no longer be treated as good law in view of the Supreme Court's dismissal of SLP against Patna High Court judgment holding that tool kits and jack assemblies are not inputs within the meaning of Rule 57A. The Daewoo Motors India Ltd. decision has taken note of Tribunals order in India Automotive Ltd. holding that tool kits are not essential accessories of final product viz. auto cycles, and therefore, their value will not be includible in the assessable value of auto cycles, which decision was approved by the Supreme Court as seen from 1998 (98) E.L.T. A72 and the Tribunal's order in Maruti Udyog Ltd. 2000 (120) E.L.T. 580 to the same effect. In an identical situation, in the case of CCE, Indore v. Bajaj Tempo Ltd. 2004 (177) E.L.T. 1027, the Tribunal upon noting the Telco decision of the Patna High Court and the dismissal of SLP against that decision by the Apex Court and the Tribunal's decision in Daewoo Motors India Ltd. supra, has held that modvat credit of duty paid on tool kits is not available. 4. In the light of the above, we agree with the ld. SDR th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and duty is determinable, rejecting the contention of the appellants that no manufacture is involved, all aspects of assessment including availability of modvat credit can be gone into. The Tribunal has consistently held that when credit is proposed to be denied by holding that the process in which inputs on which credit has been taken were used, did not amount to manufacture, duty paid by the assessee by utilising the credit on such inputs should be treated as reversed/paid back. One such recent decision is in the case of Systematic Steel Inds. Ltd. v. CCE - 2005 (191) E.L.T. 663 [Final Order No. A/164/WZB/2005/C.I dated 17-2-2005]. We also note that in the case of CCE v. Narayan Polyplast [2005 (179) E.L.T. 20 (S.C.), where the assessee, instead of availing exemption available to final products under a particular Notification, took credit of duty paid on inputs and paid duty on the final product utilising the credit and the Revenue sought to deny credit based on Rule 57C of the Central Excise Rules stipulating that credit is not admissible of duty paid on inputs used in the manufacture of exempted product, the Supreme Court held that the credit availed and duty paid is identical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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