2001 (4) TMI 130 - AT - Central Excise

Summary

Issues involved: Determination of assessable value for goods, admissibility of Modvat credit, imposition of duty and penalties.

In the case, M/s. MDS Switchgear had two units at Jalgaon and Sinnar. The Sinnar unit manufactured goods, cleared them to Jalgaon after paying duty, and the final goods were cleared from Jalgaon after availing input stage duty. The valuation included Modvat element on inputs. The Department alleged overvaluation and demanded duty refund of Rs. 13,08,701, treating it as a deposit, not duty. Appeals were filed by both units against duty confirmation and penalties.

The Tribunal found the Department's actions unjustified. The appellants' explanation for the value inflation was deemed logical. The Department failed to assess the Modvat credit impact on the assessable value. No under-invoicing charge was proven against Jalgaon unit. The approved valuation and duty payment by Sinnar unit were valid. The attempt to convert paid duty into a deposit lacked legal basis. The recipient unit was entitled to benefit from duty paid by the supplier unit, and the determined duty amount could not be challenged by the recipient unit.

The Tribunal concluded that the proceedings were not in line with the law. The impugned order was set aside, and the appeals were allowed with consequential relief.