9911796707
TMI Blog2000 (12) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... rtmental Representative at length. 2. Issue raised in this appeal is relating to the scope and effect of Rule 57Q(7) in the light of the provisions contained in Rule 57S(8). For a proper understanding of the issue, resume of the facts is called for. Appellants manufacture three wheeler vehicles. They carry out manufacturing process with the help of works carried out by job workers. Moulds and Dies imported by the appellant were transferred to the job workers after they had reached their factory. Before transferring Moulds and Dies to job workers, appellant availed Modvat credit. Before the Modvat credit was utilised show cause notice was issued calling upon them to state why penalty should not be imposed under Rule 173Q for contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of excisable goods in the factory of the manufacturer. Capital goods with which we are concerned in this case are Moulds and Dies. Appellant-manufacturer did not have them installed in their factory. Nor did they use these Moulds and Dies for manufacture of excisable goods by themselves. What they did was to transfer them to job workers who utilised these parts in the manufacture of articles required by the appellant in their manufacturing process. The question now posed in the case is whether such a step could be resorted to by the appellant after availing Modvat credit. 5. In this regard one has to refer to the provisions contained in Rule 57S of the Rules. Rule 57S(1) provides that capital goods in respect of which credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they violated provisions contained in Rule 57Q(7) read with Rules 57S(8)(9) and (10). From the order impugned in this appeal it is clear that the Commissioner found violation of Rule 57Q(7) on the ground that the appellant wrongly availed Modvat credit on Moulds and Dies which were never installed and used in their factory. Was this approach made by the Commissioner warranted by the provisions contained in 57Q of the Rules? 7. Rule 57Q(7) is not to be dealt with in isolation. 57Q(7) as observed earlier is, in general terms, dealing with capital goods including Moulds and Dies. Credit on that type of capital goods can be taken when they are installed or used for manufacture of excisable goods in the factory of manufacturer. The provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue to the Larger Bench rightly, on facts, found "certain Moulds and Dies imported by them (appellant) had been received in their factory and had later been transferred to their job workers". Thus, it is crystal clear that Moulds and Dies were in fact received by the appellant in their factory. They were subsequently removed to the job worker for manufacture of components required by the appellant in the manufacture of three wheeler vehicles. It is also proved that the provisions contained in Rules 57S(8)(9) and (10) were strictly complied with by them. 9. Appellant received Moulds and Dies in their factory. They availed Modvat credit by making entries in RG 23A register. They did not utilise that credit for any purpose. When action was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself. 10. In view of what has been stated above, we hold that the Commissioner was clearly in error in holding that the appellant contravened the provisions contained in Rule 57Q(7) read with Rules 57S(8)(9) and (10) and Rule 57Q(1) of the Rules. Modvat credit availed by the appellant was reversed by the appellant before show cause notice was issued. Even then the Commissioner imposed a penalty of Rs. 10 Lakhs invoking the provisions contained in Rule 173Q(1)(bb) of the Rules. Penalty is set aside, since it was unwarranted. Assessee was right in availing Modvat credit on Moulds and Dies. 11. Order of the Commissioner impugned in this appeal is set aside in its entirety with consequential relief to the appellant. - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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