SOUTHERN IRON AND STEEL CO. LTD. Vs. CCE

JUDGEMENT

(1.) BY this appeal, the appellants challenge the order in Appeal No. 150/2002 (CBE)(GVN) dated 12.7.2002 passed by the Commissioner (Appeals), Trichy whereby the Commissioner has upheld the order passed by the original authority and rejected the appeal filed by the Appellants before him.

(2.) THE brief facts of the case are that the appellants are manufacturers of pig iron, steel billets and bars and rods falling under CSH 72 of CETA 1985. They were availing Modvat Credit on various capital goods received by them in their factory. During the period 8/2000 to 2/2001, it was noticed that they had removed capital goods on which CENVAT credit was availed, viz. Gunning Mass. Whytheat, Graphite Electrodes by debiting only 50% of duty amounting to Rs. 1,44,1282/ - in their CENVAT Credit Part II Register. In terms of Explanation to clause (b) of the of sub -rule (10) of Rule 57AB when the capital goods are removed from the factory, the manufacturer of the final product shall pay the appropriate duty of excise leviable thereon as if such capital goods have been manufactured in the said factory and such removal shall be made under the cover of an invoice prescribed under Rule 52A. In the circumstances show cause notice was issued which culminated in order in original passed by the Deputy Commissioner rejecting the appeal against which the party went in appeal before the Commissioner (Appeals), who also rejected the appeal. Hence this appeal.

(3.) SHRI S Jayakumar, learned Counsel for the appellant referred to the grounds of appeal and submitted that some of the capital goods on which they have availed credit are rejected by them due to various reasons and had to be sent back to the original suppliers and while clearing such rejected capital goods, to the original supplier they pay duty amount equal to the Cenvat Credit availed. Further, the assessees have a vailed only 50% of the excise duty amount as Cenvat Credit and the same has been paid at the time of return of the capital goods. He has submitted that neither was there any manufacture of capital goods nor sale of capital goods in their case and they rejected certain of the capital goods being unfit for their use. The capital goods rejected are as such and were not put into use by them. In such cases, there is no ground to demand differential duty. As regards, levy of interest and imposition of penalty, he has submitted that provisions relating to interest and penalty can be invoked only when there was fraud, or wilful misstatement, or suppression of fact etc. with a view to evade payment of duty. He submitted that appellants have paid the amount equal to the Cenvat credit taken and in such circumstances, the allegation that they have suppressed the facts or there was any intention to evade duty, is without any basis and he prayed for allowing the appeal. He has also relied upon the Judgment of the Larger Bench in the case of CCE, Vadodara vs. Asia Brown Boveri Ltd. reproted in 2000 (120) ELT 228 wherein the Tribunal has held that "Legal fiction of treating the inputs as having been manufactured by the recipients of the inputs was only to see that the manufacturer restores to the original position by debiting the same rate of duty at which he had taken the credit.