CALCOM ELECTRONICS Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) The appellants were engaged in the manufacture of excisable goods falling under T.H, 85.29, 85.40 and 85.04. During the period July to Sept., 1995, they cleared certain inputs (useable for the manufacture of VHF tuners, one of their final products) on payment of duty by way of reversal of credit, to another company, M/s, Daishin Denken India Pvt. Ltd., who were also manufacturers of VHF tuners. Such clearance of the goods was under cover of invoices raised under Rule 52A of the Central Excise Rules, 1944. After about one year, the buyers returned the goods to the appellants under cover of the said invoices and the latter took re -credit of the duty on the returned inputs in their RG -23A Part -II in Sept, 1996, amounting to Rs. 87,985/ -. The department, by show cause notice, proposed to disallow the credit, alleging that the party had contravened the provisons of Rule 57G read with Notification Nos. 14/96 -C.E. (N.T.), 26/96 -C.E. (N.T.) and 28/95 -C.E. (N.T.). The tenor of the show -cause notice was that the party was not eligible to take Modvat credit on the inputs on the strength of their own invoices. The department wanted to recover the above amount under Rule 571. The department's proposal was contested by the party. The jurisdictional Asstt. Commissioner, who adjudicated the dispute, confirmed the demand of duty on the ground that their own invoices whereunder the goods had originally been cleared by them to their buyer and returned by the latter were not valid duty -paying documents under Rule 57G(2) for the purpose of Mod -vat credit. The appeal preferred by the assessee against the decision of the original authority was rejected by the Commissioner (Appeals). Hence the present appeal.

(2.) Ld. Consultant for the appellants submits that the only ground on which both the lower authorities have denied the Modvat credit is that the credit was taken on the basis of invoices issued by the appellants themselves. He submits that the appellants had cleared their inputs under cover of those invoices as if they were manufacturers of those goods in terms of Rule 57F(1) (ii). Those invoices were, therefore, issued under Rule 52A. Admittedly, the inputs covered by those invoices were returned by the buyer to the appellants and utilised by the latter in their factory in the process of manufacture of VHF tuners. Consultant submits that there is nothing in Rule 57F which prohibits availment of Modvat credit on the inputs on the strength of invoices issued under Sub -rule (1) of the Rule. Ld. Consultant further relies on the Board's Circular No. 282/116/96 -CX., dated 30 -12 -96, which clarified that the Modvat credit of the duty paid on inputs cleared by a manufacturer under cover of Rule 52A invoice could be taken by the manufacturer where the goods were returned by their buyer under cover of the same invoice.

(3.) Ld. JDR, on the other hand, submits that the Board's Circular is not applicable. According to him, the circular pertains to inputs cleared by other manufacturers.