2008 (12) TMI 477 - AT - Central Excise

Summary

Issues:
1. Reversal of credit for defective picture tubes used in manufacturing TV sets.
2. Demand for duty on rejected picture tubes sold as waste and scrap.

Analysis:
1. The case involved the manufacturing activities of BPL, Bangalore, specifically concerning the treatment of defective picture tubes used in the production of color TV sets. The Additional Commissioner of Central Excise dropped proposals for (a) reversing credit related to defective picture tubes and (b) demanding duty on rejected picture tubes sold as waste and scrap. The rejected picture tubes amounted to a credit of Rs. 6,02,187 from May 1997 to March 2000, and duty of about Rs. 29,336 from April 2000 to March 2002. The Commissioner (Appeals) determined that the defective picture tubes became unsuitable during the assembly of color TVs due to specific processes involving high voltage and current, leading to their rejection.

2. The Commissioner (Appeals) concluded that there was no requirement for BPL to reverse the CENVAT credit on defective picture tubes used in the manufacturing process. Additionally, the proposal to impose duty on the clearance of rejected picture tubes was based on a classification under Chapter Heading 8529, which was found to be inappropriate. The Commissioner classified the rejected color picture tubes as non-excisable under CH 85.29. The judgment emphasized that no credit reversal was necessary for inputs that became defective during the production process, ultimately dismissing the Revenue's appeal.

In summary, the appellate tribunal upheld the decision of the Commissioner (Appeals), ruling in favor of the respondent and dismissing the appeal filed by the Revenue. The judgment clarified the treatment of defective picture tubes in the manufacturing of color TV sets, highlighting the legal position that no credit reversal was required for inputs that became defective during production.