1999 (3) TMI 514 - AT - Central Excise

Summary

Issues:
Quantum of Modvat credit on picture tubes for television sets manufactured by the appellant.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Mumbai involved the consideration of the Modvat credit taken on picture tubes for television sets manufactured by the appellant. The Department discovered discrepancies in the stock of goods on 29-2-1992, including excesses and shortages. Additionally, the Department found that the appellant had claimed insurance on picture tubes that were damaged or broken, leading to a proposal to deny credit as these tubes were deemed unusable in television set manufacturing.

The appellant's advocate argued that the balance in the accounts records as of 29-2-1992 should be the primary consideration, as this was the date when the stock was checked by the officers. The advocate highlighted discrepancies in the book balance on subsequent dates, questioning the necessity of amending the balance after the initial stock check. Despite these contentions, the Tribunal noted that the appellant's argument did not significantly impact the case, as the figures for picture tubes remained consistent, with shortages falling within the scope of the notice issued by the Department.

Another issue raised was the calculation method used to determine shortages in 20" picture tubes, suggesting a clerical error led to incorrect entries regarding tube sizes. The Tribunal rejected this method, emphasizing the importance of considering the physical stock of broken and damaged color picture tubes. Reference was made to a previous decision to illustrate the inappropriateness of setting off shortages and excesses against each other as a general practice in factory discrepancies.

Regarding the Modvat credit taken on unsuitable picture tubes, the Collector demanded duty equal to the credit taken on tubes deemed unfit for television set manufacturing. The appellant contended that many tubes had minor damages and were repairable for use in manufacturing. However, the Tribunal found insufficient evidence to support this claim, ultimately upholding the Collector's decision on this matter.

Furthermore, discrepancies in the duty rates applicable to color picture tubes during the relevant period were raised. The Collector's application of Rule 9A(4)(iii) was deemed incorrect, with the Tribunal emphasizing the need for the correct recovery of duty paid on goods used as credit. The recovery process should align with Rule 57I(2) to address the amount actually taken as credit on inputs not utilized as per the rules.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and directing a reassessment of the recoverable amount of credit once the appellant regains access to the seized documents for proper determination.