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TMI Blog2010 (7) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we note that the appellant had cleared a diesel engine on payment of duty to a customer on 28-2-95 by availing MODVAT Credit of CVD paid on a pair of turbochargers, which were imported and fitted into the said engine. As the engine was damaged en route to the buyer s premises, it was brought back for repairs under Rule 173H of the Central Excise Rules, 1944. The repaired engine was then cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l authority demanded the amount of Rs. 10,74,080/- equivalent to MODVAT Credit taken on the first pair of turbochargers. It also imposed a penalty of Rs. 2 Lakhs on the appellant. The decision of the adjudicating authority was affirmed by the Commissioner (Appeals) who, however, vacated the penalty imposed on the party by the lower authority under Section 11AC of the Act. The present appeal is aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond repairs. Therefore, a new pair of turbochargers was imported and used in the course repairs of the engine. The engine, after completion of such repairs, was removed on payment of full duty by the appellant by utilizing MODVAT Credit of the CVD paid on the new pair of turbochargers. In the wake of this transaction, the department required the appellant to reverse the MODVAT Credit taken on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the first pair in the course of repairs. Where the appropriate amount of duty was paid on the finished product (on the full assessable value including the cost of turbochargers), the manufacturer was entitled to take MODVAT Credit on the turbochargers which were imported on payment of CVD and used in the engine. Accordingly, the appellant cleared the engine finally on 27-4-96 on payment of appro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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