TaxTMI 
TaxTMI 
2018 (4) TMI 285
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....pply systems for telecom sector. They import Rectifiers and avail cenvat credit of CVD as well as SAD paid at the time of import, Such Rectifiers after receipt in the factory are sometimes cleared for further manufacture of power supply systems and in certain other cases they are cleared for use as spare parts. The dispute is with reference to the clearance made by the assessee for use as spare parts. It is the claim of the appellant that Rectifiers after being imported are subject to various processes within the factory i.e. (1) Hi-Pot Test (2) Programming (3) Load-sharing and current-sharing voltage test and Burning Test for 2 hours before clearing as to spare parts, The Department was of the view that the process carried out by the appel....
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....credit availed of imported rectifiers or the said product is to be considered as manufactured product under Section 2(f) of the Central Excise Act, 1 944 and the rules made therein, 5.1. At the outset, we find that the submissions of the learned Counsel that the processes carried out by them i.e. hi-pot test, program, load sharing current sharing voltage test and burn-in test, seems to be not exactly the processes, which would enhance the capacity of the rectifiers imported by the appellant. In the entire submissions made by the appellant before us and before the adjudicating authority, there is no technical write up which would indicate as to how the processes (as recorded hereinabove), are incidental or ancillary to a manufactured prod....
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....cepted the payment of duty on the manufactured goods will not carry the case of the appellant any further, as in those cases, it is observed that the duty liability discharged by the appellant therein was in excess of the credit availed by them on the inputs. In the case in hand, it is seen that the credit availed is more and the duty paid is less, 7. At the same time, we also agree with the contentions of the learned Counsel that the penalties imposed by the adjudicating authority are unwarranted It is seen from the records that the appellant had been filing monthly returns regularly and was intimating the Revenue about the activities carried on, as per his bonafide belief that the rectifiers, which have undergone the test would a....
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....on of penalties on appellant is unwarranted and hence are set aside. The appeal is disposed off in the above terms." 2. With the above background, we heard Shri B. N. Gururaj, learned advocate appearing for the appellant as well as Dr Harish, learned DR appearing for the Revenue, 3. The learned counsel appearing for the appellant drew our attention to the technical write-up submitted at the time of filing the appeal before the Tribunal and explained that after receipt of the Rectifier within the appellant's factory, the goods are subjected to various tests including the burning test for two hours, the purpose of carrying out these tests to test whether the imported goods satisfy the specifications prevailing in India and ....
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....e them fit for use. The learned DR further argued that the impugned Order-in-Original has covered the demand made in show-cause notice dated 07.09.2006 as well as show-cause notice dated 03, 12.2007, Both the show-cause notices have been issued within the normal period of limitation/ but invoking the suppression clause, Hence he submitted that the demands fall within the normal time limit. Even after the processes carried out within the factory, the Rectifiers remain identical products at the time of clearance and hence are required to be considered as goods removed such', incurring to mischief of Rule 3(5) of the Cenvat Credit Rules. The learned DR further submitted that the imported goods which are cleared are being cleared as spare p....
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....ch are prevailed in India. Without carrying out these tests, the imported Rectifiers are not considered fit for use in the Indian conditions, Rule 3(5) of the Cenvat Credit Rules is reproduced below: "3(5) When inputs or capital goods, on which cenvat credit has been taken, are removed as such from the factory, or premises of the provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9." The above Rule provides for demand of an amount equal to the credit availed in respect of inputs/capital goods if they are removed \ as such'. In the present case, as seen fro....