ASHOK LEYLAND LTD. Vs. CCE

JUDGEMENT

(1.) In both these appeals, a common question of law and facts are involved; hence they are taken up together for disposal as per law. Appellant had availed modvat credit of duty on inputs under Rule 57G of Central Excise Rules. According to the department, in few of the cases as detailed in the show cause notice in tabulated form, they had not used inputs in the manner specified in chapter X (M) of Central Excise Tariff Act and their clearances of inputs/components as such without reversal of appropriate duty credit taken up appeared to be in violation of Rule 57F of CE Rules and done with an intention to evade payment of Central Excise duty. They were also alleged that they had misdeclared the credit availed inputs/components as "scrap" in their clearance documents and had paid duty only on the scrap instead of reversing the entire duty taken. It was alleged that this mis -declaration on the part of the appellants appeared to be with an intention to evade payment of appropriate duty on the same and appeared to have suppressed regarding disposal of inputs demand of appropriate credit taken and thereby proviso to Rule 57 -1(1) (ii) of CE Rules, 1944 read with proviso to Section 11A (1) of CE Act was invoked for demand of duty for extended period of five years in both these appeals, besides invoking penal provisions.

(2.) The appellants submission in this matter had been that

(3.) It is contended by the appellants that the various explanations will give an idea as to how there had been rejections and why at times there are also obsolete items rejected and cleared as waste and scrap; that they were engaged in manufacture of chassis which required 3,000 to 4,000 components (both sub -assemblies and major assemblies) and more than 60% of components/assemblies are bought out finished, these components/assemblies at times suffer duty in the hands of the manufacture and at times are received from exempted units. Ail these components/assembly have been received and duly accounted. Wherever input duty had been paid for such input, credit had been availed. Only then components that have become obsolete or in the course of manufacture found to be defective are rejected/scrapped. Such components have been sold as waste and scrap of ferrous and non -ferrous metals. There had been payment of duty on waste and scrap.