9911796707
TMI Blog1997 (2) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... The brief facts of the case are that the appellants herein are engaged in the manufacture of digital microwave radios to be supplied to the Department of Telecommunications, for the purpose of establishing telephone communcation links. The appellants imported certain machines/equipment and claimed the benefit of Modvat in terms of Rule 57Q. The details of the equipment on which Modvat was claimed are as under : B.E.No. Date Commodity Chapter Heading Amount of RG 23C Credit taken Rs. Pt.II Entry No. Date 1819 4-3-1994 Test system for testing base band equipments 9801.00 30,65,796.50 01 dated 12-4-1994 1820 4-3-1994 Test system for testing micro- wave (RS) Porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... help of the testing equipments and since such type of processes being carried out by the testing equipments do not qualify to be considered as a process as defined in Rule 57Q and also since testing equipment cannot be considered as goods having been used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products as contemplated under Rule 57Q, it was held by the Collector that the testing equipments are not capital goods, as defined under Rule 57Q and hence, Modvat is not admissible. Hence this appeal. 3. Shri L.P. Asthana, learned Counsel for the appellants submits that in the case of such sophisticated and sensitive equipment such as digital microwave radios which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (finished goods of the appellants therein), and therefore, they would be eligible for the benefit of Modvat credit under Rule 57Q. 3.1. He next contends that the demand is barred by limitation as the show cause notice under Rule 57U(1) has been issued on 7-10-1994 which is beyond the period of six months from the date of taking credit which is 1-4-1994. He, therefore, prays that the impugned order may be set aside and the appeal may be allowed both on merits as well as on limitation. 4. Shri P.K. Jain, learned SDR strongly opposing the learned Counsel s submissions, argues that the role of the equipment is only testing which is only incidental or ancillary to the completion of manufacture. He refers to the technical literature which con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order), the demand is within the statutory period of six months and is not barred by limitation. 5. We have carefully considered the submissions of both sides. Rule 57U(1) as it stood during the relevant period provided that where credit of specified duty on capital goods under Rule 57Q has been taken on account of an error, omission, or misconstruction on the part of an officer or a manufacturer or an assessee, the proper officer may within six months from the date of such credit, serve notice on the manufacturer or assessee who has taken such credit requiring him to show cause why he should, not be disallowed such credit and where the credit had already been utilised, why the amount equivalent to that credit should not be recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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