SHARDA MOTORS INDUSTRIES LTD. Vs. CCE, CHENNAI-II

JUDGEMENT

(1.) M /s. Sharda Motors Industries Ltd. have filed this appeal being aggrieved by the order of the learned Commissioner. The learned Commissioner in the impugned order had held that invocation of larger period in terms of Section 11A of the Central Excise Act, 1944 read with Rule 57U (6)/57AH of Central Excise Rules. 1944 is justified. Learned Commissioner confirmed the demand of Rs. 21,99,959/ -. He also imposed an equal amount as penalty under Section 11AC and penalty of Rs. 1.0 lac under Rules 57U/57AH and 173Q of the Central Excise Rules, 1944. The facts of the case brief are that the appellants herein are manufacturer of automobile components. They manufactured these items for M/s. Hyundai Motor India Ltd. They were taking CENVAT credit in respect of inputs and capital goods under Rule 57AA of the Central Excise Rules. The Central Excise officers noticed that the appellant was availing Modvat credit on capital goods belonging to and received from M/s. Hyundai Motor India Ltd. under Leave and Licence Agreement. On perusal of the records it was noticed that in respect of checking fixtures, jigs and fixtures the appellants had taken Modvat credit of Rs. 21,99,959/ -. The Department was of the view that since these goods were not owned by the appellants they were not entitled to take credit under Rule 57Q on the goods. A Show Cause Notice was issued to the appellants asking them to explain as to why Modvat credit should not be denied to them after invoking the proviso to Section 11A(1) and why penalty should not be imposed. In reply to the Show Cause Notice the appellants submitted that M/s. Hyundai Motors India Ltd. imported some of the moulds and dies for manufacture of components required by them; that the goods were imported on payment and appropriate duty of customs under proper Bill of Entry; that the said moulds and dies were sent to the appellants under valid duty paying document in terms of Leave and Licence Agreement. Learned Consultant for the appellants submitted that the appellants fulfilled all the requirement for purpose of taking Modvat credit on the impugned goods; that the Central Board of Excise & Customs Circular No. 263/8/89 dated 1.3.1989 clearly specified that Modvat credit facilities would be available in case of purchase as well as stock transfer and have allowed the Modvat credit on the goods given for job work; that the above point of view was also followed in the case of Vimla Rolling Mills Pvt. Ltd. v. CCE, New Delhi reported in, 1997 (20) RLT 753. In regard to extending period of demand beyond six months the appellants cited and relied upon the judgment of the Apex Court in the case of CCE v. Chemphar Drugs & Liniments reported in : 1989 (40) ELT 276 :, 1989 (21) ECR 182 (SC) in the case of Padmini Products v. CCE reported in, 1989 (43) ELT 195 : : 1989 (25) ECR 289 (SC) and in the case of M/s. Tamil Nadu Housing Board v. CCE, Madras reported in, 1994 (74) ELT 9 (SC) : : 1994 (55) ECR 7 (SC).

(2.) ARGUING the case for the appellants learned Consultant for the appellants reiterated the above submissions and prays that the appeal may be allowed.

(3.) WE have heard the rival submissions. We have also perused the case -law cited and relied upon. We note that Central Board of Excise & Customs had clarified by its clarificatory letters issued to M/s. Maruti Udyog Ltd. and M/s. TELCO clarifying that Modvat credit could be taken in respect of Jigs and moulds sent to job worker. We do not see any reason not to follow this clarification given by the Central Board of Excise & Customs.