WESTON ELECTRONICS LTD. Vs. CCE NEW DELHI

JUDGEMENT

(1.) Appellants herein who hold value based advance licence manufactured Aluminum Electrolytic Capacitors valued at Rs. 16,25,249/ - out of inputs imported duty free under notification No. 203/92 and exported the same. As per condition No.V(a) of the notification, modvat credit under Rule 57(A) Central Excise could not be availed. It came to the notice of the department that appellants availed (sic) amount of Rs. 3,38,789/ - on inputs used in the exported goods thereby violating the condition of the notification. In terms of Govt. Of India circular dated 10.1.97, they were given an option to reverse modvat credit alongwith interest @ 24% per annum up to 31.1.97 failing which they would be liable to penal action. Appellants reversed modvat credit but did not pay the interest amount of Rs.2,74,052/ - accrued on that credit. Therefore, a show cause notice dated 18.2.98 was issued to the appellants, proposing recovery of duty alongwith interest on inputs effected under V.B.A.L. licence and proposing imposition of penalty under Section 112 of the Customs Act. The appellant stated that modvat credit or Rs. 64737/ - had been availed by them in the manufacture of goods in question, and that they had reversed above mentioned amount by the RG 23A part -II entry No. 663 dated 11.2.95 itself. commissioner confirmed duty demand of balance of modvat credit of 274052/ - alongwith interest of Rs. 2,21,248/ - and also imposed penalty of Rs. 50,000/ - under Section 112 of the customs Act. Hence this appeal.

(2.) The appellants represented by their counsel Shri M.P. Devnath do not dispute the liability to pay interest, however, they state that they have actually availed credit of Rs. 64737/ - only had reversed the above mentioned credit amount and are therefore liable to pay only interest payable on Rs. 64737/ - Ld. DR however, supports the findings of the Commissioner regarding liability to pay balance modvat credit of Rs. 274052/ - together with the interest of Rs. 2,21,246/ -

(3.) On Hearing both sides and perusing the show cause notice and the order, we are of the view that the factual position regarding amount of credit actually availed on inputs used in the manufacture of export products will have to be verified. The show cause notice stated that the assessee had availed modvat credit of Rs. 3,38,789/ - against export products but also states that they reversed modvat credit but failed to pay interest of Rs. 2,74,052/ -. Commissioner in para 5 of the impugned order also observes that the basic issue is non payment of interest of Rs.2,74,052/ -. In para -II of the impugned order he hold that proposed credit of Rs. 2,74,052/ - alongwith interest of Rs. 2,21,248/ - is (sic) from the appellant.