2006 (1) TMI 347 - AT - Central Excise

Summary

Issues:
1. Reversal of credit on certain inputs for manufacturing television sets.
2. Duty payment and clearance of goods under protest.
3. Interpretation of Rule 57D regarding unserviceable inputs and obsolete materials.
4. Refund of excess amount paid and imposition of penalty.

Analysis:
1. The case involved appeals against two orders-in-appeal passed by different Commissioners (Appeals) regarding the reversal of credit on inputs used for manufacturing television sets. The respondents claimed that certain inputs were not used due to obsolescence and breakage, leading to the reversal of credit under protest on 1-5-1996. Subsequently, the respondents cleared these goods under different invoices, which were seized by the departmental officers.

2. The first impugned order-in-appeal confirmed smaller amounts of duty demand on scrap and goods not co-related with the earlier clearances. The second impugned order-in-appeal held that the duty paid earlier on 1-5-1996 by reversal of credit was not warranted, considering the goods were lying in the respondents' premises. The provisions of Rule 57D were also taken into account in this decision.

3. The Tribunal examined the case comprehensively and concluded that the impugned goods, being unserviceable inputs and obsolete materials, did not qualify for benefit under Rule 57D, which applies to waste and scrap arising during the manufacture of finished goods. The respondents were held liable to pay a specific amount quantified by the original authority, but were entitled to a refund of the excess amount paid, with the penalty imposed being waived due to duty payment prior to removal.

4. Consequently, the impugned order-in-appeal in Appeal No. E/2135/04 was set aside, and the order-in-original was restored while waiving the penalty. In the case of Appeal No. E/824/04, the order was confirmed, rejecting the department's appeal and allowing the department's Appeal No. E/2135/04 to the extent indicated above. The decision was dictated and pronounced in open court by the Tribunal.