2009 (3) TMI 701 - AT - Central Excise

Summary

Issues:
1. Non-return of moulds by job workers under Rule 57-S(8) of Central Excise Rules, 1944.
2. Reversal of Modvat credit and penalty imposition.
3. Adjudication by Additional Commissioner and Commissioner (Appeals).

Issue 1: Non-return of moulds by job workers under Rule 57-S(8) of Central Excise Rules, 1944

The appellants sent moulds to their job workers for manufacturing plastic components under Rule 57-S(8) of the Central Excise Rules, 1944 in December 1998. However, even after more than 10 years, the moulds were not returned to the factory. The appellants had availed a credit of Rs. 10,16,851 on these moulds, which was subsequently reversed by them after being pointed out by Central Excise Officers. The Additional Commissioner confirmed this reversal and imposed a penalty of Rs. 10,000. The Commissioner (Appeals) upheld the reversal but set aside the penalty.

Issue 2: Reversal of Modvat credit and penalty imposition

The Modvat credit availed by the appellants on the moulds was reversed due to non-receipt of the moulds back in the factory even after more than 10 years. As per Rule 57-S(10) of the Central Excise Rules, 1944, if the moulds are not returned within three months from removal or any extended period permitted by the Commissioner, duty equivalent to the credit taken on the moulds must be paid. Since there was no permission from the Commissioner for an extension and the moulds were not returned, the reversal of Modvat credit was deemed appropriate. The lower authorities' orders confirming the reversal were upheld, and the appeal was rejected.

Issue 3: Adjudication by Additional Commissioner and Commissioner (Appeals)

The case was adjudicated by the Additional Commissioner, who confirmed the reversal of Modvat credit and imposed a penalty. On appeal, the Commissioner (Appeals) upheld the reversal but set aside the penalty. The legal provisions under Rule 57-S(8), Rule 57-S(9), and Rule 57-S(10) of the Central Excise Rules, 1944 were considered in the adjudication process. The Orders of the lower authorities were upheld, and the appeal filed by the appellants was rejected.

This comprehensive analysis of the legal judgment highlights the issues of non-return of moulds by job workers, the reversal of Modvat credit, and the adjudication process by the Additional Commissioner and Commissioner (Appeals) under the relevant provisions of the Central Excise Rules, 1944.