METZELLER AUTOMOTIVE PROFILES Vs. CCE

JUDGEMENT

(1.) In these two appeals, arising out of common Adjudication order; the issue involved is whether Modvat credit of the duty is to be disallowed to M/s. BTR Wadco Automotive Ltd. (now M/s. Metzeller Automotive Profiles India Pvt. Ltd).

(2.) Shri B.L. Narsimhan, learned Advocate submitted that M/s. Metzeller Automotive Profiles manufactured weather strips and Anti Vibration System, which were being manufactured in two separate divisions in the same premises; that the manufacturing activities of both the divisions were, however, separate that they entered into an agreement dated 16.2.01 with M/s. Trellborg Automotive India (P) Ltd. (Appellant No. 2) for the transfer of the Anti Vibration System Division with assets and liability to Appellant No. 2; that in terms of the said agreement they transferred the entire plant and machinery, raw material work -in -progress, consumables, finished stock, etc. to the Appellant No. 2 who was to continue work in the same premises as the Anti Vibration System division; that the Commissioner under the impugned order has disallowed the Modvat credit on the ground that the sale having been taken place, duty was required to have been discharged by the Appellant No. 1 in terms of Rules 9(1) and 49 of the Central Excise and Rule 57AB(1C) of the Central Excise Rules, 1944. The learned Advocate, further, submitted that under provisions of Rules 9(1), 49 and 57AB(1)(b) of the Central Excise Rules, 1944, duty of excise is payable only on the removal of the goods from the factory of the manufacturer; that the removal contemplated in these Rules is the physical removal and not deemed removal; that in the present case, it has been admitted by the Commissioner himself that there was no physical displacement of the material, that these provisions deal with a situation where inputs or capital goods are removed from the factory and these are not applicable at all in a case where the inputs or capital goods are transferred on account of sale; that in the present matter, Anti Vibration System division has been transferred on account of sale to Appellant No. 2 and there is no physical removal of the input or capital goods. He relied upon the decision of Tribunal in the case of Whirlpool of India Ltd. v. CCE, New Delhi, 2003 (58) RLT 241 (CESTAT) and Jamna Auto Industries Ltd. v. CCE, Indore, 2001 (130) ELT 181 (Tribunal) wherein it has been held by the Tribunal that sale of a factory resulting in change in ownership does not amount to removal of the inputs and capital goods.

(3.) Countering the arguments, Shri U. Raja Ram, learned Departmental Representative, submitted that the explanation below Sub -rule (1)(b) of Rule 57AB of the Central Excise Rules, 1944 clearly provide that when inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or 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; that admitted fact is that entire Anti Vibration System Division has been sold to Appellant No. 2 who have now become the owner of the same and this amounts to removal of the goods from Appellant No. 1 to Appellant No. 2 and, therefore, in view of Explanation to Sub -rule 57AB, the Appellants No. 1 is liable to discharge the duty liability.