2003 (12) TMI 171 - AT - Central Excise

Summary

Issues involved: Whether Modvat credit of duty is to be disallowed to M/s. BTR Wadco Automotive Ltd. (now M/s. Metzeller Automotive Profiles India Pvt. Ltd).

Summary:
In the appeals before the Appellate Tribunal CESTAT, New Delhi, the issue revolved around the disallowance of Modvat credit of duty to M/s. BTR Wadco Automotive Ltd. (now M/s. Metzeller Automotive Profiles India Pvt. Ltd). The dispute arose from the transfer of the Anti Vibration System Division to another entity, Appellant No. 2, and the subsequent implications on duty liability.

Arguments by the Advocate:
The Advocate argued that duty of excise is payable only upon physical removal of goods from the factory, not upon sale or transfer of a division. Citing relevant provisions of the Central Excise Rules, the Advocate contended that in cases of transfer due to sale, where there is no physical displacement of goods, duty liability does not arise. Referring to precedents, the Advocate highlighted that ownership change through sale does not constitute removal of inputs or capital goods.

Department's Counter-arguments:
The Departmental Representative countered by pointing out the explanation under Rule 57AB, which mandates duty payment upon removal of inputs or capital goods from the factory. The sale of the Anti Vibration System Division was considered as a form of removal from Appellant No. 1 to Appellant No. 2, thus triggering duty liability according to the Department.

Tribunal's Decision:
After considering both sides' submissions, the Tribunal noted that the division was sold without physical removal of goods from the factory premises. Emphasizing that the deemed removal provisions do not apply in cases of sale, the Tribunal relied on previous decisions to rule in favor of the Appellants. It was held that Appellant No. 1 was not liable to pay duty or penalty, aligning with the precedent set in similar cases. Consequently, both appeals were allowed by the Tribunal.