COMMISSIONER OF CENTRAL EXCISE Vs. MICRO TURNERS

JUDGEMENT

(1.) SHORT question in this appeal of the Revenue is whether on the defective motor vehicle parts received by the respondents herein after payment of duty by the consignee and returned to the respondents for removing the defects Modvat credit can be taken or not. Original authority denied the Modvat credit on the ground that this does not amount to process of manufacture and hence no Modvat credit can be taken. On appeal before the lower appellate authority the respondents herein succeeded.

(2.) LEARNED JDR, Shri T.A. Arunachalam for the appellant submits that the process undertaken by the respondents does not amount to manufacture and therefore, the benefit of Modvat credit of duty paid, even though by the original consignee of the goods cannot be allowed inasmuch as it is essential for taking the Modvat credit that some manufacturing must take place from inputs to get another commodity.

(3.) OPPOSING the contention, learned Advocate, Shri J.P. Kaushik submits that in the present case the Modvat credit is permissible since the process undertaken by the respondents amounts to process of manufacture. He submits that on receipt of the defective motor vehicle studs, the respondents herein had undertaken the process of rethreading and electroplating of the studs. These process he submits amount to process of manufacture in view of Section Note 6 to Section XVII of the Schedule to the Central Excise Tariff Act, 1985 which for better appreciation is reproduced below : -