1991 (2) TMI 258 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57F(1) regarding the removal of inputs to another unit and reversal of MODVAT Credit.
2. Application of Rule 57C in demanding duty for inputs contained in samples of finished products.

Analysis:

1. The appeal involved a dispute over the application of Rule 57F(1) concerning the removal of inputs to another unit and the reversal of MODVAT Credit. The appellants had taken MODVAT Credit for certain inputs, which were later removed to another unit by reversing the credit. The Revenue demanded duty based on Rule 57F(1) at the rate applicable on the date of clearance to the other unit. The appellants argued that the Revenue should only reverse the MODVAT Credit. The Tribunal analyzed Rule 57F(1) and held that when inputs are removed from the factory, they are deemed to be the manufacture of the factory, necessitating duty payment based on the date of removal and applicable classification. The duty could exceed the credit taken but not be less than the credit. The Tribunal upheld the lower authority's decision to demand differential duty, ruling in favor of the Revenue.

2. The second issue revolved around the application of Rule 57C, where duty was demanded for inputs contained in samples of finished products that were destroyed after testing. The appellants argued that until testing was completed, the products were not marketable and hence not excisable. The Tribunal distinguished a previous case where goods were held as not marketable without testing due to contractual requirements. In this case, as there was no plea regarding the marketability of goods before testing, the Tribunal held that the duty demanded for inputs in samples was valid under Rule 57C. The Tribunal rejected the appeal, upholding the duty demanded by the authorities.

In conclusion, the Tribunal ruled in favor of the Revenue, upholding the duty demands under Rule 57F(1) for the removal of inputs to another unit and under Rule 57C for inputs in samples of finished products. The appeal was rejected, and the impugned order was upheld.