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Issues Involved:
The issues involved in this case are the disallowance of Modvat credit under Rule 57U(3) of the Central Excise Rules, the interpretation of the term 'job worker' in Rule 57S(8), and the imposition of penalty for alleged mis-statement to evade duty. Disallowance of Modvat Credit: The Commissioner disallowed Modvat credit to the appellants amounting to Rs. 23,55,581 under Rule 57U(3) of the Central Excise Rules due to the supply of moulds to M/s. Showpla India Ltd. for manufacturing TV cabinets. The Commissioner imposed a penalty and confiscated the moulds with a redemption fine. Interpretation of 'Job Worker': The appellants contended that M/s. Showpla India Ltd. should be considered a 'job worker' under Rule 57S(8) as they used the moulds supplied by the appellants for production. The Commissioner, however, argued that the relationship between the parties was not that of a job worker and principal, based on the removal of moulds without consent. The appellants argued that the definition of 'job worker' in Rule 57S(8) should not be based on other exemption notifications, as the provisions of Rule 57S(8) to (10) were specific to the supply of capital goods like moulds. Imposition of Penalty: The Commissioner found a mis-statement by the appellants with the intention to evade duty, justifying the imposition of a penalty. The appellants argued that the entire exercise was revenue-neutral and that M/s. Showpla India Ltd. should be considered a job worker under Rule 57S(8). Judgment: Upon review, the Appellate Tribunal found that the interpretation of 'job worker' in Rule 57S(8) should not be based on definitions in other notifications, as the provisions of Rule 57S(8) to (10) were specific to capital goods like moulds. The Tribunal disagreed with the Commissioner's reasoning and set aside the order, granting consequential benefits to the appellants. The denial of Modvat credit was deemed unsustainable, and the finding of mis-statement was also rejected.
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