MONIKA ELECTRONICS LTD. Vs. CCE

JUDGEMENT

(1.) APPEAL Nos. E -4658/04 and E/5087/04 are filed by M/s Monika Electronics Limited and Onida Saka Ltd. against order in appeal dated 18/08/04 and 11/08/04. Appeal Nos. E/5713 - 5718/04 are filed by the revenue against the same order in appeals.

(2.) THE relevant facts that arise for consideration are the officers of the Central Excise visited the premises of both the appellants and conducted investigation. During the course of investigation, the officers found that appellants were following the provisions of Central Excise Law as regards to (i) sending inputs unfit for use under Rule 57F(4) to original manufacturer for repairs (ii) availing modvat credit on the inputs which were rejected on line but found in 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 by them on which they are availed modvat credit were still lying in the factory. It is his submission that these inputs are on line rejection. He submitted that it is the practice of the industry that inputs are not put to test when they are received but they are issued to the shop floor for test and fitting. If the inputs are not according to the quality requirement they are rejected and kept aside on the shop floor. He also submits that the issue in these two cases are squarely covered by the decision of the Hon'ble High Court of Delhi in the case of Asahi India Safety Glass Limited v. Union of India as reported at .