2011 (5) TMI 772 - HC - Central Excise

Cenvat credit reversal - contention of Revenue was that the respondent herein had returned some goods which were purported to be defective. But in the guise of it, M/s. Samtel Colour Ltd. and M/s. JCT Electronics Ltd. had, in fact, given them new colour tubes instead of repaired colour tubes Held that - Tribunal noted that mere lapse on their part in not mentioning the identification marks Sl. No. of the CPTs in those challans, itself did not lead to the conclusion that no CPTs were actually sent by them for repair to appellant nos. 2 and 3 especially when it had not been alleged in the show cause notice, no merit in the appeal as the appeal does not raise substantial questions of law. Accordingly, the appeal is dismissed

Summary

Issues:
Controversy over inputs used by respondent in goods manufactured; Allegation of supplying new color tubes instead of repaired ones; Recovery of MODVAT credit and penalty imposition; Appeal against Tribunal's order; Questions of law raised in appeal; Dismissal of appeal by High Court; Dismissal of appeal by High Court in another related case; Conclusion on the issue of using CPTs as inputs; Disallowance of MODVAT credit and payment by respondent; Lack of merit in appeal raised by Revenue.

Analysis:
The primary issue in this case revolved around the controversy regarding the inputs used by the respondent in the goods manufactured by two other appellants. The Revenue alleged that the respondent had returned defective goods but had actually provided new color tubes instead of repaired ones. The order-in-original had sought the recovery of MODVAT credit and imposed penalties. However, the Tribunal, after considering the contentions of both parties, found no concrete evidence to support the Revenue's claims. The Tribunal noted that the goods were sent following the required procedures, and the appeal by all three appellants was allowed.

A subsequent appeal was filed by the Commissioner against one of the appellants, raising questions of law related to the supply of new color tubes under the guise of repair and the imposition of penalties. The High Court dismissed the appeal, rejecting the Department's claim that new tubes were sent instead of repaired ones. The Court affirmed that the Revenue had accepted this decision.

In a related appeal concerning another appellant, the High Court upheld the finding that the appellant had not supplied new color tubes but repaired ones. This conclusion settled the issue regarding the use of CPTs as inputs by the respondent.

Regarding the disallowance of MODVAT credit and payment by the respondent, the High Court noted that the ground for disallowance was not raised before the Tribunal. The Court found no merit in the appeal raised by the Revenue, as the appeal did not raise substantial questions of law. Consequently, the appeal was dismissed.

In conclusion, the judgment addressed the issues of alleged fraudulent supply of new color tubes, recovery of MODVAT credit, and penalty imposition. The High Court's decisions in various appeals affirmed that the appellants had not supplied new tubes, settled the issue of using CPTs as inputs, and dismissed the appeal due to the lack of substantial legal questions raised.