Order No. 3414/98-WZB/C-I arising from in Appeal No. E/2107/97-Bom. Case: Commissioner of Central Excise, Mumbai-V Vs Spring Fasteners. Central Information Commission

Case NumberOrder No. 3414/98-WZB/C-I arising from in Appeal No. E/2107/97-Bom
CounselFor Appellant: Shri S.V. Singh, JDR and For Respondents: Shri Gautam Doshi, Chartered Accountant.
JudgesShri K.S. Venkataramani, Vice President
IssueCentral Excise Rules, 1944 - Rule 57A
Citation1999 (112) ELT 115 (Tribunal)
Judgement DateAugust 24, 1998
CourtCentral Information Commission


(West Zonal Bench At Mumbai)

  1. The Commissioner of Central Excise, Mumbai - V has filed this appeal against the impugned order captioned above of the Commissioner of Central Excise (Appeals) Mumbai. The Respondents manufacture goods falling under Chapter 73 and 87 of the Central Excise Tariff Act, 1985 and are availing of Modvat credit under Rule 57A of Central Excise Rules. Some of the goods supplied by the Respondents were rejected by their customers being defective and the rejected goods were brought back to the factory and were used in the manufacture of final products which the respondents cleared again on payment of duty. The show cause notice was issued to the respondents on the ground that they have taken credit on their rejected final products which were not their inputs. The demand for duty on this account of Rs. 55,028.28 was confirmed by the Additional Commissioner of Central Excise who also imposed a penalty of Rs. 1,000/- on the respondents. The Commissioner (Appeals) allowed the appeal against the Additional Commissioner''s order holding that the respondents are entitled to take Modvat credit on the materials rejected and returned to them by the customers.

  2. Shri K.L. Ramteke, the ld. DR pointed out that unless it is proved that the rejected goods are, infact used in the manufacture of final products in a process amounting to manufacture, credit of duty under Rule 57A will not be available. Here the respondents are receiving the goods for repairs only which will not amount to manufacture. Therefore they are not entitled to Modvat credit on the returned defective goods from their customers.

  3. Shri Gautam Doshi, the learned Counsel for the respondents submitted that the Additional Commissioner has denied the Modvat Credit in his order by observing that the question was whether they have included their own defective parts received back from the customers in the list of inputs for Modvat purposes and has observed that no such declaration has been produced before him and therefore they are not eligible for the Modvat credit. On the other hand the respondents have infact submitted a declaration addressed to the Assistant Commissioner declaring the returned defective materials clips, rings and clamps while indicating also that they were received back for repairs and that duty credit will be taken as per the duty paid at the time of first clearance and while clearing the...

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