2005 (3) TMI 619 - AT - Central Excise

Summary

Issues involved:
1. Denial of Modvat credit on defective colour picture tubes and valuation of TV sets sold.
2. Denial of Modvat credit on four cabinet moulds.
3. Imposition of penalty on duty paid prior to show-cause notice.

Issue 1: Denial of Modvat credit on defective colour picture tubes and valuation of TV sets sold:
The appellant appealed against the denial of Modvat credit on defective colour picture tubes and the valuation of TV sets sold to a company. The Commissioner of Central Excise had denied the Modvat credit on defective colour picture tubes sent for repair and also confirmed a demand for the valuation of TVs sold by M/s. National Panasonic in UP. The appellant argued that since the duty for these demands was paid before the show-cause notice, the penalty equal to the confirmed duty amount was not sustainable. Regarding the defective tubes, the appellant received them from Samtel Colour Ltd., sent them for repair, and faced denial of credit by the Revenue claiming that new tubes were received instead of repaired ones. However, the Tribunal's decision in a similar case involving Samtel Color Ltd. established that the activity was repair, not manufacture, leading to the appellant's entitlement to credit. Similarly, the dispute over TV set valuation was settled by the Hon'ble Supreme Court's decision, dismissing the Revenue's claim for a higher price in UP compared to other states.

Issue 2: Denial of Modvat credit on four cabinet moulds:
The appellant imported moulds, availed credit, and sent them to a job worker with due permission. The moulds were returned in 1998 and were not used, leading to the denial of credit by the Revenue. However, the appellant argued that the moulds were used by the job worker from 1994 to 1998 and were now in their factory, not sold. The Revenue did not dispute the usage but focused on the current idle status. The Tribunal found in favor of the appellant, stating that the credit cannot be denied based on the moulds being unused in the factory for a period after being utilized by the job worker, ultimately setting aside the demand.

Issue 3: Imposition of penalty on duty paid prior to show-cause notice:
The penalty imposed on the appellant for duty paid voluntarily before the show-cause notice was also challenged. Citing a precedent, the Tribunal held that where duty is paid voluntarily before the notice, the penalty is not imposable. Consequently, the penalty imposed on the confirmed demand was deemed unsustainable and set aside. The appeals were disposed of accordingly, with the appellants entitled to any consequential relief as per the law.

This detailed analysis of the judgment addresses the issues of denial of Modvat credit, valuation disputes, and penalty imposition, providing a comprehensive overview of the legal reasoning and outcomes for each matter considered by the Appellate Tribunal.