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2002 (3) TMI 307 - AT - Central Excise
Issues: Duty liability on stock transfer clearances to Service Centre, applicability of Rule 57F(3)(a), place of removal for parts sold at Service Centre, duty on captively consumed goods, applicability of Rule 6(a) of Central Excise (Valuation) Rules 1975.
In this case, the appellants, who are manufacturers of computers and peripherals, availed Modvat credit on certain items and used them as inputs or cleared them under Rule 57F(4) to their Service Centre at Bangalore for warranty requirements. A show cause notice was issued demanding differential duty on stock transfer clearances to the Service Centre, as the place of removal was considered to be the Service Centre where sale is effected. The duty demand was confirmed, and a penalty was imposed under Rule 173Q. The Tribunal considered the matter and made the following findings: (a) Duty liability on 'inputs' removed as 'inputs' under Rule 57F(3)(a) is limited to the credit availed, following the precedent set by the Larger Bench in a previous case. Therefore, the demands on 'inputs' based on Section 4 of the Central Excise Act were set aside. (b) For 'parts' manufactured and cleared on a stock transfer basis to the Service Centre, the place of removal would be where they are sold after clearance from the factory, which in this case is the Service Centre. Hence, duty on the Service Centre sale price is to be recovered on such parts. (c) In the case of goods manufactured and cleared as parts but captively consumed at the Service Centre, the place of removal would be the factory at Mysore, and duty on the prevailing price at that place should be recovered, not at the Service Centre. (d) The Tribunal left the consideration of granting the benefit of Rule 6(a) of the Central Excise (Valuation) Rules 1975 to the parts sold in retail at the Service Centre to the jurisdictional original authority for determination. The proper officer should re-determine and quantify any demand, if applicable, and decide on the liability and penalty on the appellants. Ultimately, the appeal was allowed as remanded based on the above findings and considerations.
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