Customs, Excise and Gold Tribunal - Tamil Nadu
Lakshmi Machine Works Ltd. vs Commissioner Of C. Ex., Coimbatore on 13 February, 2002
Equivalent citations: 2002ECR655(TRI.-CHENNAI), 2002(144)ELT424(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. For the purpose of hearing this appeal, appellants are required to pre-deposit a sum of Rs. 72,762 /- which was allegedly wrongly availed by them and confirmed under Rule 57-I of Central Excise Rules, 1944 read with Section 11A of the Central Excise Rules, 1944. They were also required to pre-deposit a sum of Rs. 2,000/- as penalty under Rule 173Q of C.E. Act.
2. Since the matter lies in a short compass, we are deciding both the stay petition as well as the appeal inasmuch as the matter is covered one by the Tribunal judgment rendered in the case of Eimco Elecon (India) Ltd. v. CCE, Ahmedabad reported in 1994 (74) E.L.T. 918. Hence, after granting waiver of pre-deposit, we take up the appeal itself for disposal, as per law.
3. Ld. Counsel, Shri R. Raghavan invited our attention to Para 3 of the Order-in-Appeal No. 161/2001, dated 30-7-2001 in which the Commissioner has noted that this is a case where the goods have been returned to the factory since the recipient factory was under lock out. He noted that these goods were in fact not for repairing and reconditioning. Hence, the procedure under Rules 173H and 173L would not be followed. 10% of these returned goods (spare parts) was used in the manufacture of further excisable goods. On these goods, the unit has availed Modvat. The rest of 90% of the goods were cleared on payment of duty for second time. Ld. Commissioner has also observed that the requirement of verification of the goods before making use in the factory is mandatory as there are restrictions in bringing and retaining their own manufactured products in their factory premises. The Id. Counsel also invited our attention to Para 2 of the Order-in-Appeal wherein it is clearly recorded that the appellant had filed D3 intimation to the Central Excise Office immediately on receipt of the goods. It is also on record that they were not claiming Modvat credit on all items which were returned back and they are availing only on very few items which constitutes only 10% of the returned goods which they used as inputs in the manufacture of final product. Barring this 10% of the goods which are returned, rest of the 90% of such returned goods were cleared on payment of duty for the second time. He has also invited our attention to the judgment rendered by the Western Region Bench, Mumbai in the matter of Eimco Elecon (India) Ltd. v. CCE, Ahmedabad (supra). In that case also, the components were cleared outside the factory on payment of duty but received back due to labour trouble and intimation was given to the department about the return of the components indicating availment of Modvat credit. Also in that case, the components were used in the manufacture of final product within the factory. Since the components as well as final product are both notified for Modvat scheme, Modvat credit cannot be denied merely because the component have gone outside the factory on payment of duty and returned. It was also held that permission under Rules 57A, 173H or 173L of the Central Excise Rules, 1944 is not necessary for availing Modvat credit on returned inputs.
4. Ld. SDR invited our attention to Para 3 of the impugned order wherein the Id. Commissioner has held that the requirement of filing D3 declaration either under Rule 173H or under Rule 173L is a mandatory requirement and duty paid goods cannot be returned to the factory except for reconditioning/repair, etc. either under Rule 173H or under Rule 173L. He, therefore, submitted that the credit has been rightly denied by the lower adjudicating authority and confirmed by the lower appellate authority.
5. Heard both sides. This is a case where the goods have been returned to the factory since the recipient factory was under lock out. The facts in this case is similar to the facts in the case of Eimco Elecon (India) Ltd. v. CCE, Ahmedabad (supra). There also, the unit was manufacturing final product as well as components and the same were exempted when used in captive consumption. In that case also, some components were cleared outside the factory on payment of duty but received back due to labour trouble at the recipient factory. They had also given intimation to the department about return of components intimating availment of Modvat credit. Since components as well as the final product are both notified under Modvat scheme, Modvat credit cannot be denied merely because the components had gone outside the factory on payment of duty and returned. The Western Region Bench had also held that permission under Rule 173H or under Rule 173L of the Central Excise Act, 1944 is not necessary for availing Modvat credit on such returned goods. Respectfully following the ratio of the above judgment of the Western Region Bench and also in view of the fact that the duty paid components were returned back due to lock-out of the recipient company, Modvat credit cannot be denied to them. We, therefore, allow the appeal by setting aside the impugned order of the Commissioner (Appeals). Ordered accordingly.