2014 (12) TMI 412 - AT - Central Excise

Modvat credit - manufacture of coils - Non production of documents - Held that - when the assessee himself brought to the notice of the department that they are entitled to Modvat credit and the documents have been produced to the investigating officer, the observation that modvat credit has been claimed without documents is surprising. The adjudicating authority simply said that the documents were not produced before him. We also find that coils which are prepared for repair amounts to manufacture of new coil is not coming out. This aspect has not been considered at all. The ground taken by the Revenue is that the appellant is able to sell coils and therefore, the coils can be said to have been manufactured and marketed and since the same is happening in the other unit. In the activity of replacing the coils for repairing motor / generators, the coils can be said to have been manufactured. The question whether winding an old motor would amount to manufacture of a new coil was not addressed properly. Since nothing is clear, we consider it appropriate that the matter should go back to the original authority to begin a fresh proceeding, proper verification of all the documents with regard to the appellant s claim of Modvat credit and quantification of duty payable, etc. - Decided in favour of assessee.

Summary

Issues Involved:
1. Liability to pay Central Excise duty on coils manufactured during motor/generator repairs.
2. Eligibility for Modvat credit benefit.
3. Marketability of coils used for repairing motors/generators.

Analysis:
1. The appellant, a manufacturer of coils, informed the department about the liability to pay Central Excise duty on coils manufactured during repairs. The first unit paid duty, but the second unit did not. The appellant claimed no duty if Modvat credit was considered. A show-cause notice was issued proposing duty demand, ignoring Modvat credit. The Commissioner (Appeals) allowed the appeal based on non-marketability of coils for repairs. The Tribunal remanded the matter for proper discussion, questioning the marketability of coils.

2. The appellant argued that the repairing was a 'works contract service' subject to VAT, and Modvat credit was ignored. The Revenue contended that the appellant did not provide details or documents for Modvat credit, which were rightly denied. The Tribunal noted discrepancies in the consideration of Modvat credit and the manufacturing aspect of coils for repairs.

3. The Tribunal found discrepancies in the consideration of marketability of coils used for repairs. The Revenue argued that since coils were sold and duty paid, they were marketable. The Tribunal highlighted the lack of clarity on whether repairing motors constituted the manufacture of new coils. The matter was remanded for a fresh proceeding to verify documents, quantify duty, and clarify the manufacturing aspect. The original authority was directed to expedite proceedings due to the age of the case.

This detailed analysis covers the issues of liability for Central Excise duty, eligibility for Modvat credit, and the marketability of coils used in motor/generator repairs as addressed in the judgment by the Appellate Tribunal CESTAT BANGALORE.