PUNJAB PAINT COLOUR AND VARNISHES Vs. CCE

JUDGEMENT

(1.) THE appellant challenges the order in appeal dated 30th July 2004 of the Commissioner (Appeals) upholding the order -in -original dated 20.08.2001 by which the Deputy Commissioner confirmed demand of Rs. 1,24,873/ - against the appellant in terms of Rule 57 -I/57 -AH of the Central Excise Rules, 1944 and imposed penalty of Rs. 10,000/ - under Rule 173Q of the Central Excise Rules, 1944, besides directing payment of interest under Section 11AB of the Act. The appellant has filed written submissions through the authorized representative for disposal of the matter.

(2.) THE appellant was engaged in the manufacture of paints, enamel and varnish falling under chapter heading Nos. 27, 32 and 38 respectively of the Tariff Schedule. The appellant was availing modvat credit facility in terms of declaration filed under Rule 57G of the Rules on 29th March 2000. The appellant submitted a letter bearing C. No. Ex -PP/99 -2000/3205 dated 29th March 2000 to the Superintendent, Central Excise submitting that they shall be receiving "In process Paint (rejected paint) under Rule 57 -A for further manufacture of their final product. It was also stated that they had filed a declaration under Rule 57G declaring the said goods as their inputs. On 30th March 2000, the appellant submitted an intimation in form D -3 in respect of receipt of duty paid excisable goods in their factory premises under Rule 173 -H of the Rules. The goods were described in the invoice dated 25th March 2000 of M/s Asian Paint, as "APCO" synthetics enamel of golden brown colour. Similar description was given of the goods in the prescribed form D -3. In the remark column of the said form, it was stated that the goods were received for further use in the manufacture of "AMPRO (Asian Primer Red Oxide). According to the Revenue, the letter dated 29th March 2000 written by the appellant had no connection with the material received under the said invoice and declared in the prescribed form D -3 because, in the said letter the party had informed about the receipt of In process Paint' (rejected paint), whereas, in the prescribed form D -3, the appellant had informed about the receipt of finished and finally packed branded goods namely "AMPRO synthetic enamel paint". The Deputy Commissioner on the basis of the material on record came to a finding that the goods received under the invoice dated 25th March 2003 were fully finished and branded product and nowhere was it mentioned that they were rejected paint or "in process paint", and further that the test report showing that the goods were defective, was not produced, came to a finding that modvat credit was wrongly taken on these goods, and confirmed the demand. The Appellate Commissioner also came to the same finding that the goods received by the appellant were nothing but marketable product as per the declaration made under Rule 173B. It was held that the appellant was not entitled to take credit on these goods which were final product as declared by the appellants themselves.

(3.) IN their written submissions, the appellant have stated that they had received sub -standard paint from M/s Asian Paints (India) Limited under excise invoice dated 25th March 2000 and this defective material was to be used for manufacture of other paint namely AMPRO -Asian Metal Primer Red oxide. According to the appellant, it had complied with all the requisite conditions of modvat rules by filing a proper declaration with the department for utilizing such input in the manufacture of paints. In para 4 of the written submissions, it is slated that the appellants by their declaration in Form D -3 had informed the department that they had received rejected duty paid paint under the cover of excise invoice and that the said rejected paint will be used as an input in the manufacture of another paint. It is submitted that the order passed by the Commissioner (Appeals) was, therefore, without authority of law and should be set aside. In para 5 of the written submissions, the appellant has relied upon the decision of the larger bench of the Tribunal in CCE, Meerut -II v. Tin Manufacturing Company, a copy of which is annexed to the written submissions and submitted that, since the present issue is squarely covered by that judgment, modvat credit availed by the appellant should not be disallowed by the department. The appellant has also relied upon the following three decisions which are referred to in para 6 of the written submission in support of its contentions.