VIKAS FORGING PVT. LTD. Vs. CCE

JUDGEMENT

(1.) The appellants were engaged in the manufacture of steel forgings and were availing the facility of Modvat credit on inputs during the relevant periods. The forgings supplied by the appellants to some of their customers were returned by the latter on account of defects. The customers also reversed the Modvat credit which they had earlier taken on the goods. The appellants, upon receipt of the defective goods, treated them as inputs and converted the same into fresh forgings according to the specifications of new buyers. They took Modvat credit on the defective forgings and utilized the same for payment of Central Excise duty on the new forgings. The Modvat credit so taken amounted to Rs. 44,262.73 P which was disallowed by both the Assistant Commissioner and the Commissioner(Appeals). Hence the present appeal.

(2.) Heard both the sides. The learned Counsel for the appellants submits that the defective goods returned by their customers were subjected to the same process of manufacture was the one employed originally for the manufacture of those goods. This fact was adequately explained to the lower appellate authority but that authority did not appreciate the same. The finding recorded by the Commissioner (Appeals) to the effect that the appellants did not substantiate their plea of re -manufacture cannot be sustained inasmuch as, in the appellants' own case, the Commissioner (Appeals) had, for an earlier period, accepted the said plea. In this connection, the learned Counsel refers to order -in -appeal No 2CE/2002 dated 31.12.2002 passed by the Commissioner (Appeals), Faridabad in the present appellants' own case. He further relies on a few decisions of the Tribunal's larger Bench, which are cited below : - Hindalco Industries Ldt Vs. CCE [2000 (119) ELT 711] CCE Meerut Vs. Tin Manufacturing Co. [2000 (119) ELT 290] CCE Meerut Vs Bhushan Steel & Strips Ltd [2001 (119) ELT 293] It is pointed out that, in each of the cited cases, it was held that, where a final product rejected and returned by the buyer was subjected to re -manufacture, it would be treated as input and the duty paid thereon would be available as Modvat credit to the manufacturer under Rule 57 -A of the Central Excise Rules, 1944.

(3.) The learned SDR seeks to distinguish the instant case from the cited cases. It is her submission that, in the instant case, unlike in the cited cases, adequate factual basis of the plea of re -manufacture was not provided by the appellants. She contends that the larger Bench decisions can be applied only where re -manufacture is established as in those cases. In the earlier case of these appellants, apparently they could substantiate the plea of re -manufacture. On the facts of the instant case, the appellants cannot succeed.