2000 (12) TMI 409 - AT - Central Excise

Issues Involved:
1. Demand of Rs. 37,91,395.94 for inputs cleared to the spare parts department and sold at higher prices.
2. Demand of Rs. 2,62,989.72 for inputs cleared to the spare parts division with collected Central Excise duty.
3. Demand of Rs. 1,07,75,626.83 for goods removed without payment of duty.
4. Demand of Rs. 5,81,069.79 for irregular Modvat credit utilized on clearances of sub-assemblies.
5. Demand of Rs. 16,66,902.53 for manufacture and clearance of sub-assemblies without payment of duty.
6. Demand of Rs. 5,81,069.75 for sub-assemblies manufactured out of imported inputs without Modvat credit.
7. Limitation and suppression of facts.
8. Imposition of penalty and redemption fine.

Detailed Analysis:

1. Demand of Rs. 37,91,395.94:
The first demand confirmed by the Commissioner pertained to inputs cleared to the spare parts department and sold at higher prices. The appellant conceded a portion of Rs. 2,53,557/- for processed inputs. For the remaining amount, the appellant argued that Modvatable inputs were cleared after reversing the credit in terms of Rule 57F, and the subsequent sale price was irrelevant. The Tribunal found that the case was covered by previous decisions (CCE v. American Auto Service and CCE v. Asia Brown Boveri Ltd.), which supported the appellant's contention. Thus, the demand of Rs. 35,37,838.94 was set aside.

2. Demand of Rs. 2,62,989.72:
The appellant argued that the basis for this demand was unclear and not detailed in the adjudication order. The Tribunal noted that the Commissioner confirmed the demand without providing any reasoning. Consequently, the demand was found unsustainable and set aside.

3. Demand of Rs. 1,07,75,626.83:
This demand was for goods removed without payment of duty, based on allegations that the appellant collected duty but did not pay it to the authorities. The appellant contended that 64% of the inputs were non-Modvatable and provided documents for verification. The Tribunal found that a detailed examination of the appellant's contention was necessary and remanded the matter to the Commissioner for further examination.

4. Demand of Rs. 5,81,069.79:
The Commissioner reduced the original demand to Rs. 5,81,070/- for duty not paid on imported inputs used in sub-assemblies. The appellant argued that local parts with Modvat credit were used in the assemblies. However, the Tribunal noted the absence of concrete evidence from the appellant and upheld the demand.

5. Demand of Rs. 16,66,902.53:
This demand was for sub-assemblies cleared without payment of duty. The appellant argued that the department's reliance on a letter was disproportionate and that they could correlate the spare parts transfer notes with the RG. 1 register. The Tribunal found the appellant's contention reasonable and remanded the matter for further examination.

6. Demand of Rs. 5,81,069.75:
The demand was for sub-assemblies manufactured from imported inputs without Modvat credit. The appellant failed to provide documentary evidence to show the use of indigenous inputs with Modvat credit. The Tribunal upheld the demand in the absence of such evidence.

7. Limitation and Suppression of Facts:
The Tribunal noted that the appellant's use of private documents (Spare Parts Transfer Notes) and failure to include them in RT-12 returns constituted suppression of facts. Therefore, the demands were not hit by limitation.

8. Imposition of Penalty and Redemption Fine:
The Tribunal deferred the penalty aspect to be examined by the Commissioner upon remand. The redemption fine was deemed reasonable and was not interfered with.

Conclusion:
The appeal was disposed of with certain demands being set aside, others upheld, and some remanded for further examination. The penalty and redemption fine aspects were left to be reconsidered by the Commissioner.

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