2000 (8) TMI 130 - AT - Central Excise

Summary

Issues:
1. Denial of modvat credit to the appellant
2. Allegation of under valuation of goods produced by the appellants as a job work for Steel Authority of India Limited
3. Modvat credit taken by the appellant on welding electrodes
4. Collections made by the appellants towards charity

Analysis:

1. Denial of Modvat Credit:
The first issue pertains to the denial of modvat credit to the appellant amounting to over Rs. 61 lakhs. The appellant, despite not being a small scale unit, availed exemption under notification No. 1/93 and cleared goods without paying duty. The counsel acknowledged that the appellant was not entitled to the exemption and suggested assessing all goods manufactured by them at the appropriate duty rate. The Tribunal found that the appellant could not simultaneously avail themselves of exemption as a small scale unit and claim duty credit on inputs. Therefore, the Tribunal directed to deny the small-scale exemption and subject all goods to central excise duty while allowing relief under the modvat scheme.

2. Under Valuation of Goods Produced for SAIL:
The second issue concerns an approximately Rs. 9.6 lakh demand due to alleged under valuation of goods produced by the appellant as job work for Steel Authority of India Limited (SAIL). The appellant faced a dispute regarding the assessable value based on a certificate from SAIL indicating additional charges beyond the ex-factory price. The appellant argued that the goods produced were comparable to SAIL's products and hence, the ex-works price was appropriate for duty calculation. The Tribunal decided to re-examine the issue considering the lack of data on SAIL's additional charges and the appellant's collections for packing and delivery.

3. Modvat Credit on Welding Electrodes:
The third issue involves a demand of over Rs. 16,000 due to modvat credit taken by the appellant on welding electrodes used for repair and maintenance, not in the production of goods. The Tribunal upheld the demand as the electrodes were not eligible for credit during the relevant period and were not used in manufacturing finished goods.

4. Collections for Charity:
The final issue concerns collections of about Rs. 40,000 made by the appellant towards charity, with a demand of about Rs. 6,000. The counsel argued that charity charges should not be added to the assessable value of goods per Supreme Court precedent. However, as no evidence was presented on the charity's utilization, the demand was confirmed, albeit not pressed by the counsel.

In conclusion, the Tribunal confirmed the demands related to welding electrodes and charity collections, while remanding the case for re-consideration of other demands. The Assistant Commissioner was directed to pass a fresh order after allowing the appellant to present their case.