COLLECTOR OF CENTRAL EXCISE Vs. POLAR INDUSTRIES LTD.

JUDGEMENT

(1.) M /s. Polar Industries Ltd. (hereinafter referred to as PIL') had procured their inputs from the manufacturers availing of the small scale exemption and paying central excise duty at the concessional rate. PIL were engaged in the manufacture of electric fans and were not eligible for the small scale exemption. On receipt of the inputs from the small scale assessees, they took Modvat credit. They however, did not utilise these inputs in the manufacture of electric fans and removed such inputs as such without any processing. On removal of the inputs, they paid central excise duty equivalent to the Modvat credit taken by them on receipt of the said inputs. During the relevant time the inputs could only be removed for home consumption on payment of appropriate duty of excise as if such inputs had been manufactured by the assessee receiving them, as per provisions of Rule 57F of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules') - The Asstt. Collector of Central Excise in his adjudication order dated 24 -12 -1991 referred to the provisions of Rule 57F of the Rules and observed that the inputs removed as such were deemed to be manufactured by PIL and as PIL were not eligible for the small scale exemption, the rate of duty applicable was to be the rate that applied to them and not the concessional rate applied to the small scale manufacturers from whom the inputs had been procurred. On appeal, the Collector of Central Excise (Appeals) mentioned that there was no evidence that PIL had sold such inputs at a higher rate than that at which they were purchased. He held that PIL had correctly cleared the inputs by reversing the amount of Modvat credit availed by them and no further duty could be demanded from them.

(2.) WE have heard Shri M.P. Singh, JDR and Shri S.D. Gaur, Consultant.

(3.) THE issue for our consideration is whether the inputs in respect of which the credit of duty had already been taken under Rule 57A of the Rules, could be removed from the factory of PIL for home consumption during the relevant time on payment of concessional rate of duty when PIL were not eligible for such concessional rate of duty. It was not a case where the inputs had been removed for repairs and return. It was a case of removal under Rule 57F(1) which during the relevant time read as under : -