HMT LTD. Vs. CC AND CE

JUDGEMENT

(1.) THE issues involved in these two appeals filed against the Order -in -Original No. 4/97 & 5/97 both dated 18.9.1997 passed by the Commissioner are identical and are being disposed of by this common order.

(2.) APPELLANTS manufacture Machine Tools falling under Chapter 84 of the Central Excise Tariff Schedule. Appellants, during the years 1993 -1994 manufactured Flexible Machining Systems (F.M.S.) falling under Tariff Heading 84.57 of the tariff schedule for supply to Defence. For these multi functional machine tools, (F.M.S) the Appellants imported inputs from abroad. The credit of countervailing duty (CVD) was taken after filing the declaration under Rule 57G. They were maintaining a combined RG 23A Part II for all Machine tools falling under Chapter 84 and utilised the credit taken on imported components for Machine tools falling under Chapter 84 other than FMS. Later, when FMS were cleared for Defence, duty was paid partly through PLA and RG -23A Part II. The admitted position is that items used in FMS were not capable of being used in the machine tooling cleared in RG 23A Part I debits. The Department issued show cause notices and the Learned Commissioner confirmed the duty demands on the ground that utilisation of Modvat Credit on inputs used and intended for FMS for other Machine tools was irregular relying on Rule 57F(4) as it stood then. The following amounts were confirmed under Section 11A of the Act and penalty was imposed on the Appellants.

(3.) THE Appellants submit (a) since the Department permitted combined RG 23A Part II, as per TN 60/87 (p. 36 and 36 of paper book) they utilised the available credit for payment of duty on Machine tools other than FMS. It is also submitted that in the comprehensive circular dated 4.5.1994 issued by the Central Board of Excise & Customs containing instructions on Modvat, CBEC has permitted maintenance of combined RG 23A Part II (p. 55 to 66 of paper book)