2003 (1) TMI 593 - AT - Central Excise

Summary

Issues:
1. Modvat credit disallowance for damaged Cathode Ray Tubes
2. Duty calculation for parts of Oscilloscope used for repair
3. Denial of Small Scale Industry (SSI) exemption based on brand name
4. Clearance of instruments for testing without proper documentation
5. Duty calculation for parts of Oscilloscope cleared by a company

Issue 1: Modvat credit disallowance for damaged Cathode Ray Tubes
The Revenue appealed against the Orders-in-Appeal disallowing Modvat credit for damaged Cathode Ray Tubes. The Additional Commissioner disallowed the credit, stating the tubes were not used in manufacturing final products. The Commissioner (Appeals) allowed the credit under Rule 57D(2) of the Central Excise Rules, noting the tubes were damaged during testing, which is part of the manufacturing process. The Tribunal held that damaged tubes not used in manufacturing final products are not eligible for Modvat credit. Rule 57D applies only to inputs in waste arising during manufacture, which did not occur with the tubes. Thus, the Revenue's appeal was allowed in this regard.

Issue 2: Duty calculation for parts of Oscilloscope used for repair
The Additional Commissioner confirmed duty demand for parts of Oscilloscope used in repair. The Commissioner (Appeals) adjusted the duty rate to 5% ad valorem for small scale industry exemption eligibility. The Tribunal agreed with the Revenue that duty should be the amount of credit availed under Rule 57A when inputs are removed as such. Therefore, the duty calculation was upheld based on the credit availed for repairing instruments.

Issue 3: Denial of SSI exemption based on brand name
The Revenue contended denial of SSI exemption due to affixing goods with a foreign company's brand "HM." The Commissioner (Appeals) allowed the benefit, noting "HM" indicated the model of Oscilloscopes, not a brand name. The Tribunal agreed, stating "HM" did not signify a brand name of another person. As the goods bore the brand name "Scientific," the benefit of the SSI exemption was rightly granted.

Issue 4: Clearance of instruments for testing without proper documentation
Allegations were made against the clearance of instruments for testing without evidence of return by one company and removal without accounting or duty payment by another. The Tribunal remanded this aspect for re-examination by the Adjudicating Authority to consider all material and provide a fair hearing to both companies.

Issue 5: Duty calculation for parts of Oscilloscope cleared by a company
The Commissioner (Appeals) found the company eligible for SSI exemption, adjusting the duty rate to 5% ad valorem. The Revenue did not challenge this finding, leading to the Tribunal upholding the extension of the SSI Notification benefit. Both appeals were disposed of accordingly.