2003 (12) TMI 407 - AT - Central Excise

Summary

Issues:
1. Assessment of duty on bought out items for ADAMS.
2. Liability for duty on software.
3. Entitlement to Modvat credit for bought out items.

Analysis:
1. The appeals involved the issue of assessing duty on bought out items for ADAMS. The appellants contended that the bought out items, such as uncoded cards, cables, and junction boxes, were not integral parts of the goods manufactured by them. They argued that these items were supplied separately to customers and did not undergo any manufacturing process in their factory. The Tribunal noted that the appellants failed to provide sufficient evidence to support their claim that the bought out items were optional and not integral to ADAMS. Despite referencing previous decisions, the appellants did not present documents related to orders placed by customers or data on the interrelation between manufactured parts and bought out items. The Tribunal found the appellants had not contributed material supporting their contention after a previous order. The duty demand on software was also addressed separately in subsequent orders, resulting in the demand being dropped. The Tribunal held that as long as duty was payable on bought out items, the appellants were entitled to Modvat credit for the same.

2. Regarding the liability for duty on software, the Tribunal found that in the subsequent orders, the demand for duty on software had been dropped. Therefore, the Tribunal concluded that there was no justification for sustaining the demand for software in the period covered by the appeals E/73 and 176/02. The Tribunal also emphasized that the appellants could claim Modvat credit for bought out items subject to compliance with Modvat Rules. The Tribunal referenced a previous direction that allowed Modvat credit for inputs used as final products, even without filing a declaration, as long as duty was demanded for those items as one entity. The Tribunal dismissed appeals E/618 and 837/2002 and held that the demand for duty on software could not be sustained in appeals E/73 and 176/2002.

3. The issue of entitlement to Modvat credit for bought out items was addressed by the Tribunal, stating that the appellants were entitled to claim Modvat credit for the entire period covered by the appeals. The Tribunal clarified that this entitlement did not prevent the appellants from establishing before authorities in other proceedings, by providing sufficient material, that the bought out items were not integral parts of ADAMS. The Tribunal disposed of the appeals with the above findings, allowing the appellants to claim Modvat credit while emphasizing the need for supporting evidence regarding the bought out items' integration into ADAMS.