SURYA ROSHNI LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) In this appeal, which has been preferred by the assessee against the impugned order -in -appeal, the issue relates to the denial of the Modvat credit of Rs. 16,67,051/ - availed on the broken shells which were never used in or in relation to the manufacture of the final products, by the appellants.

(2.) Ld. Counsel has contended that the appellants are entitled to claim credit even on the broken shells not used in or in relation to the manufacture of the final products. He referred to the provisions of Rule 196 of the Central Excise Rules under which exemption to the payment of duty has been provided where the goods were removed under Chapter X procedure. He has also contended that the appellants were working under the bona fide belief that they were entitled to the credit on the broken shells also and there was no mala fide intention on their part to avoid the payment of the duty, therefore, no penalty could be imposed.

(3.) On the other hand, ld. SDR has reiterated the correctness of the impugned order and contended that the appellants, had not utilised the broken sheets in the manufacture of the final products, therefore, no credit could be claimed by them and that provisions of Rule 196 of the Rules referred by the Counsel, have no application to the case.