2001 (12) TMI 695

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....h Shri G. Shiv Das, ld. Advocates, submitted that the appellants, a State Government Undertaking, manufacture high tech telecommunication systems which are mainly supplied to the Department of Telecommunication (DOT); that in order to meet the requirements of DOT, the appellants had to introduce products compatible to the requirements of the DOT for which they obtain necessary know-how from various countries; that for introducing new equipment they followed the practice of nominating a team of four to five engineers from three manufacturing divisions; that the team of engineers studied the technology and the products were manufactured making use of the said technology; that they were categorising the products undertaken for the first time a....

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....gister; that the Commissioner under the impugned order did not take into consideration the co-relation made by them merely by saying that the audit report under the head "yield of finished products" indicated that it was not possible to calculate the yield of finished goods and the auditors had mentioned that being a product of peculiar nature having very large number of components, it was not possible to calculate the yield; that the Commissioner in view of the Test Audit Report did not accept the submissions of the appellants that the inputs consumed in R&D had gone into the manufacture of final product. The ld. Advocate also submitted that in any case even assuming that inputs in question have been used for R&D purposes, so long such use....

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....uipments which may take a considerable time and such research and development work cannot be considered to be part of the manufacturing process. 4. We have considered the submissions of both the sides. We observe that the question to be decided in the present appeal is whether the inputs, which were shown to have been consumed in R&D Section, were in fact used in the manufacture of finished products and which were cleared on payment of duty. The ld. Advocates for the appellants have attempted to show us by referring to various documents and registers that the inputs received in the factory in respect of which Modvat credit was availed of by them have been in fact utilized in the manufacture of the equipments which were subsequently ....