TaxTMI 
TaxTMI 
2006 (8) TMI 378
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....n the factory (iii) shortage of inputs in the case of Appeal No. E/5087/04. On a reasonable apprehension, the authorities issued a show cause notice demanding the duty from the appellants on all above three counts. The adjudicating authority confirmed the demand and also imposed penalties. On an appeal, Commissioner (Appeal) accepted the contention of the appellant and allowed the appeal as regards the non-imposition of duty on the inputs sent out under Rule 57F(4) but held against the appellants as regards the inputs which were rejected and not utilized in the manufacturing of final products. Commissioner (Appeal) also dropped the penalty imposed on the co-noticees. The appellants in appeal No. E/4658/04 and E/5087/04 are in appeal against the denial of Modvat credit on inputs which were found rejected online and Department is in appeal against the benefit of Modvat credit given to the appellants on the inputs sent out under Rule 57F(4) and also on the setting aside of penalties. Since the issue arises out of common order in appeal, they are being disposed of by one order. 3. Learned Advocate appearing on behalf of the appellants submits that the inputs which were rejected....
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.... the Unit and recorded his statement under Section 14 of the Central Excise Act, 1944 wherein he inter alia stated that colour picture tubes are not being tested at the quality control and are issued directly and tested only at the time of fitment. If any scratch or dent is noticed in the CPT at the fitment site then it is got corrected through the representative of the supplier in the factory itself otherwise in case of other defect a sticker is pasted on them and these CPT's are sent back to the supplier under warranty scheme and we get fresh CPT's against the returned one. After getting acquainted with the process of production and quality control, the officers conducted the physical verification of the stock of finished goods and major modvatable inputs which when compared found to be tallied with the book balance recorded in RG-1 and store Ledger respectively (Comparison chart as per Annexure E & F). However, the stock of rejected/damaged and scraped inputs namely CPT's Cabinet & Rear-cover and other raw other raw materials involving Modvat credit of Rs. 66,794/- were found tying in the Raw material store of the factory." 6. It can be seen from the above reproduced por....
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....tained in the final product or not the department cannot deny credit of specified duty or even can vary on the ground that part of the inputs contained in any waste, refuse or by-product arising during the manufacture of final product or when the inputs have become waste during the course of manufacture of the final product whether or not such waste or refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or not specified as a final product under Rule 57A. 31. In substance, when the material i.e. glass sheet is used for the manufacturing process and merely because at a later point of time after the glass has undergone the process of manufacture, it was found defective and rejected or part of the input being found defective and rejected is no ground in view of Rule 57A read with Rule 57D to deny the benefit. 32. In view of what is stated herein above, we find that the commission has misdirected itself in examining the question. 33. Considering the stage-wise process indicated earlier, it is clear that the process commences with loading of the float glass sheet on the float table where cutter is used to cut the....
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.... which were found during the visit of the officers, I find that the statements were recorded of the concerned people in the factory as on 14th January 1999 and show cause notice was issued to them on 27-3-03 i.e. almost after four years. It is a settled law that a show cause notice which is issued after two years then it is non-est as affirmed by the Hon'ble Supreme Court in the case of Gammon India Ltd., [2002 (146) E.L.T. A313 (S.C.) in an appeal against order of the Tribunal as reported at 2002 (146) E.L.T. 173 (Tri.-Mum.). In view of this, the demand of the duty in respect of inputs found short in this case is hopelessly time barred and the confirmation thereof is set aside. 10. As regards, the demand of the duty set aside by the Commissioner (Appeals) in both the cases when the inputs were cleared from the appellant's factory under Rule 57F(4) under Central Excise Rules, 1944 and received back, I find that issue is squarely covered by the final order of the Tribunal No. A-639-641/03, dated 28-10-2003 [2004 (164) E.L.T. 261 (Tri.-Del.)], wherein the Tribunal has held as under :- "8. Similarly, regarding the receipt of the new CPTs by appellant No. 1, instead of those....