2004 (97) ECC 742 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(C)

Shri V.K. Agrawal, Member (T) and Shri P.S. Bajaj, Member (J)

Hotline Wittis Display Devices Ltd. & Anr

Versus

CCE, Noida

Appeals No. 1873-1874/2003-NB(C)

[Arising out of Order-in-Original No. 05/Commr./2003 dated 1.5.2003 passed by the Commissioner of Central Excise, Noida)

Final Order No. A/596-97/2004-NB-C, dt. 25.8.2004, Certified on 2.9.2004

Modvat Credit

Inputs -- CPT manufactured -- Cleared on payment of duty to their customers -- So removed by them were received back from their customers. After repairing the same and also yamming with deflection yoke had removed the same under invoices issued under Rule 52A. After giving reference of either previous invoice or buyer's invoice number under which these were received back by Assessee. It cannot be said that they had taken the Modvat Credit wrongly. Hence, penalty set aside -- Rules 52A, 57G of CER.

Appeal allowed

PRESENT :

Shri A.R. Madhav Rao, Advocate for the appellants.

Shri Kumar Santosh, SDR for the respondent.

Per : V.K. Agrawal

In these two appeals arising out of a common Order-in-Original the Appellants are challenging disallowance of Modvat Credit and imposition of penalty. Shri A.R. Madhav Rao, learned Advocate, submitted that M/s. Hotline Wittis Display Devices Ltd., Appellants No. 1, manufacture colour television and avail Modvat Credit of the duty paid on inputs including colour picture tubes (C.P.T.); that they purchase C.P.Ts. from various manufacturers including L.G. Hotline CPT Ltd., Appellants No. 2; that during January 2000 to January 2001 the Appellant No. 1 had taken Credit of the duty paid on CPTs on the strength of invoices issued by Appellants No. 2; that the said invoices indicated the duty payment particulars by giving reference to either previous invoice number or the buyer's invoice number under which the same were received back under D-3 intimation; that the Commissioner under the impugned Order had disallowed the Modvat Credit on the ground that the Appellants No. 2 ought to have paid the Excise duty on the higher value since they are fitting the deflection yoke in the picture tube bringing into existence a complete picture tube. The learned Advocate further submitted that the Appellants No. 2 had received some CPT back from their customers and they had filed D-3 intimation with the Department; that after undertaking the process of yamming they had cleared the said tubes to the Appellants No. 1 on the strength of the invoices issued under Rule 52A; that while raising invoices on Appellants No. 1 M/s. L.G. Hotline CPT Ltd. had given reference to the earlier duty paying documents; that it has not been disputed by the Department that the Appellants No. 2 had received back CPT which have been cleared by them earlier on payment of duty; that they had merely fitted the deflection yoke in the returned picture tubes and the Additional Commissioner under the Adjudicating Order No. 7/2004-2005 dated 19.4.2004 has confirmed the differential duty amounting to Rs. 2,57,675 besides imposing penalty equivalent amount holding that the process of yamming of deflection yoke with CPT amounts to manufacture. The learned Advocate also mentioned that LG Hotline CPT Ltd. are not going in appeal against the said Order-in-Original dated 19.4.2004; that in view of the fact that the Additional Commissioner, having jurisdiction over the Appellants No. 2, has confirmed the duty on them the Modvat Credit taken by the Appellants No. 1 is justified as the CPT after being fitted with deflection yoke has suffered the Central Excise duty.

2. Shri Kumar Santosh, learned SDR, on the other hand submitted that at the time the CPTs were received by Appellants No. 1 they were not eligible to take the Modvat Credit as Appellants No. 2 had not cleared the same on payment of duty; that Appellants No. 2 had not cleared CPT as such which were received back by them from their customers since they have fitted the same with deflection yoke thereby bringing into existence a new commodity which was cleared without payment of duty. He finally pleaded that at least penalty should be imposed on both the Appellants as knowingly the Appellants No. 1 had taken Modvat Credit when the Appellants No. 2 had not paid any duty on CPT yammed with deflection yoke.

3. We have considered the submissions of both the sides. The facts which are not disputed are that CPT manufactured by L.G. Hotline CPT Ltd. were cleared by them on payment of duty to their customers. C.P.Ts. so removed by them were received back from their customers. After repairing the same and also yamming with deflection yoke L.G. Hotline CPT Ltd. had removed the same under invoices issued under Rule 52A of the Central Excise Rules, 1944 after giving reference of either previous invoice or buyer's invoice number under which these were received back by Appellants No. 1. The Appellants No. 1 had taken Modvat Credit of the duty equivalent to the amount mentioned in the invoices under which the impugned product was received by them. In view of these facts it cannot be said that they had taken the Modvat Credit wrongly. Moreover, the learned Advocate for the Appellants have now brought on record the Adjudication Order No. 7/2004 dated 19.4.2004 by which the Additional Commissioner, in charge of L.G. Hotline CPT Ltd. has held that the process of yamming amounts to manufacture and he has held that they were liable to pay Central Excise duty amounting to Rs. 32,43,072. The Additional Commissioner has further allowed them the Modvat Credit amounting to Rs. 29,85,397 (this was the amount of duty earlier paid by L.G. Hotline CPT Ltd. on CPTs cleared to their customers and received back). The Additional Commissioner has, therefore, confirmed the demand of differential duty Rs. 2,57,675 on account of yamming the deflection yoke. In view of this Adjudication Order passed by the Additional Commissioner at the supplier's end (Appellants No. 2) we hold that neither the Modvat credit is disallowable to the Appellants No. 1 nor any penalty is imposable on both the Appellants. We, therefore, allow both the appeals.

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