(1.) This appeal of the Revenue is against the order of the Commissioner (Appeals) allowing Modvat credit to the respondents on certain parts of electric motors under Rule 57Q for the periods November 1998 and April 1999.
(2.) The respondents had procured electric motors originally from M/s. Kirloskar Electric Co, Ltd. for the purpose of running their manufacturing units. In November 1998 and April 1999, these motors were sent to M/s. Kirloskar Electric Co. Ltd. for replacement of certain parts and for allied repair works. The Kirloskar Company undertook the job and returned the motors to the respondents under cover of invoices in which duty of excise was shown to have been paid on the value of replaced parts. The respondents took credit of this duty under Rule 57Q, which was objected to by the department on the ground that the parts of electric motors on which the credit was taken were not brought as such into the assessee's factory. The credit so taken by the part was to the tune of Rs. 1,26,640. The adjudicating authority confirmed demand of this duty under Rule 57U and imposed a penalty of equal amount on the party under the same Rule. The appeal preferred by the assessee against the order of the original authority was allowed by the Commissioner (Appeals). Hence the present appeal of the Revenue.
(3.) Ld. JDR reiterates the grounds of the appeal and emphasizes the fact that the goods in question were not brought as such into the assessee's factory. According to the DR, the respondents ought to have brought the parts of motors under proper invoices and then sent those parts alongwith the motors (to be repaired) to the job workers in terms of Sub -rule (7) of Rule 57S. In the instant case, Ld. DR submits, the motors were sent for repair work to the Kirloskar company (original suppliers), who sent back the repaired motors with replaced parts fitted thereon to the assessee's factory. According to Ld. DR, this procedure was not contemplated under Rule 57Q read with Rule 57S and, therefore, the Modvat credit was taken in an irregular manner.