2005 (2) TMI 613 - AT - Central Excise

Tribunal upholds duty demand on goods, allows Modvat credit, and sets aside penalty

ELCOT HITECH TOOL ROOM LTD. Versus COMMISSIONER OF C. EX., CHENNAI-III

ELCOT HITECH TOOL ROOM LTD. Versus COMMISSIONER OF C. EX., CHENNAI-III - 2005 (186) E.L.T. 581 (Tri. - Chennai) Issues Involved:1. Denial of exemption under Notification No. 10/97-C.E. for scientific apparatus cleared to IGCAR.2. Consideration of benefit under Notification No. 214/86 for electrodes cleared to buyers other than M/s. UCAL.3. Denial of Modvat credit on Injection Moulding Machine due to its use in the manufacture of exempted goods.4. Imposition of penalty despite payment of duty before the show cause notice.Analysis:Issue 1: Denial of exemption under Notification No. 10/97-C.E. for scientific apparatus cleared to IGCAR:The appellants contested the denial of exemption under Notification No. 10/97-C.E. for scientific apparatus cleared to IGCAR, amounting to about Rs. 2.33 lakhs. The exemption required certification of use for research purposes by a designated officer, which was not produced. The Tribunal upheld the denial, stating that the benefit of the Notification was rightly not available due to the lack of the required certificate.Issue 2: Consideration of benefit under Notification No. 214/86 for electrodes cleared to buyers other than M/s. UCAL:The appellants argued that the Commissioner failed to consider their claim for the benefit of Notification No. 214/86 for electrodes cleared to buyers other than M/s. UCAL. The Tribunal agreed, directing the Commissioner to review the claim for exemption under the said Notification for all electrode clearances during the relevant period.Issue 3: Denial of Modvat credit on Injection Moulding Machine:The question arose whether the denial of Modvat credit on the Injection Moulding Machine was justified as it was used in the manufacture of exempted goods. The Tribunal ruled in favor of the appellants, stating that since duty was paid on the final products, the Modvat credit on the machine should be allowed, emphasizing that the denial was inconsistent with the duty payment on the manufactured goods.Issue 4: Imposition of penalty despite payment of duty before the show cause notice:Regarding the penalty imposed despite payment of duty before the issuance of the show cause notice, the Tribunal held that no penalty was warranted in this case. It was noted that there was no evidence of clandestine removal of goods by the appellants, leading to the decision to vacate the penalty imposed by the Commissioner.In conclusion, the Tribunal upheld the duty demand on most goods, except electrodes cleared to customers other than M/s. UCAL, directing a review of the exemption claim for such clearances. The benefit of Modvat credit on the Injection Moulding Machine was allowed, and the penalty on the appellants was set aside. The impugned order was modified accordingly, and the appeal was disposed of.