1999 (1) TMI 193 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on additional duty paid for re-imported repaired machine.

Analysis:
The case involved the appellant, a company, importing a bottle sprinting machine in 1983, sending it to Thailand for repair in 1994, and re-importing it in 1995, claiming exemption under Notification No. 204/76. The appellant paid basic Customs duty and additional Customs duty based on the assessable value computed as per the notification. However, the Superintendent issued a show cause notice proposing to deny Modvat credit on the additional duty paid, which was upheld by the Assistant Commissioner and Commissioner (Appeals), leading to the appeal before the Tribunal.

The appellant argued that countervailing duty was paid on the re-imported machine, and the assessable value was determined by the notification, not just on repair charges. They contended that since duty was paid on the article itself, they were entitled to Modvat credit as duty paid on capital goods. On the other hand, the Respondent supported the lower authorities' reasoning, stating that no duty was paid on the value of the capital goods, and Modvat credit was not admissible.

The Tribunal considered both arguments and noted that the appellant had indeed paid countervailing duty on the re-imported item. The notification provided an exemption based on the value of the re-imported goods, including repair costs, insurance, and freight charges. The Tribunal clarified that countervailing duty is payable on the imported article itself, not just on repair or associated charges. Since the appellant had paid the additional duty of Customs, equivalent to the Modvat credit claimed, the Tribunal found merit in the appellant's submissions and set aside the previous orders, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that countervailing duty is payable on the imported article, and the assessable value determined by the notification includes various expenses, not limited to repair charges. The appellant was deemed entitled to Modvat credit as duty paid on capital goods, leading to the reversal of the denial of Modvat credit on the additional duty paid for the re-imported repaired machine.