HOTLINE CPT LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise/ Indore, dated 29 -8 -2003. Under the above order the Commissioner has upheld the demand of duty against the appellant to the extent of Rs. 3,79,96,012/ - under the proviso to Section 11A(1) of the Central Excise Act, 1944 and imposed an equal amount of penalty under Section 11AC of the Act and Rule 173Q of the Central Excise Rules, 1944.

(2.) APPELLANTS are engaged in the manufacture of colour picture tubes (CPTs for short) at their factory at Malanpur, District Bhind (MP). The CPTs so manufactured by the appellants are supplied to various colour TV manufacturers on payment of appropriate central excise duty. Sometimes buyers noticed defects in CPTs at the time of assembly of the TV. On receipt of complaint, appellants' engineers would go to the factory of the buyers and repair the same. Those CPTs which could not be repaired at the factory of the buyer were brought to the appellants factory following the procedure under 57F(4)/173H of the Central Excise Rules, 1944. In the show cause notice issued to the appellants on 26 -4 -2002 followed by a corrigendum dated 29 -5 -2002, it was alleged that in the guise of repairing defective CPTs they were replacing the same with new CPTs under the warranty clause without paying central excise duty. According to the Revenue during the period 1 -4 -97 to 21 -12 -99 the appellant had received 40567 numbers of 20" and 22037 numbers of 21" CPTs valued at Rs. 20,47,40,200/ - under Rule 57F(4)/173H showing as repaired and cleared. The appellants have evaded central excise duty amounting to Rs. 3,41,66,172/ - on this count. It was further alleged that the appellant had not accounted for the disposal of 1,12,360 numbers of 'electron guns' which are modvatable inputs. Therefore, Modvat credit of Rs. 38,29,840/ - taken on the said input was also to be recovered from the appellant in terms of Sub -rule (1)(ii) of Rule 57 -1. There were certain other allegations in the show cause notice which were not upheld by the adjudicating authority. The show cause notice proceeded on the basis of the correspondence between the appellant and buyers' representatives etc. wherein the term "replacement" has been used in respect of CPTs received under Rule 173H/57F(4) for repairs.

(3.) APPELLANT submitted detailed reply to the show cause notice and also sought cross -examination of various persons whose statements and correspondence were relied on in the show cause notice. Opportunity was granted to cross -examine only two persons, out of whom one instead of appearing in person sent a sworn affidavit to the Commissioner.