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TMI Blog2004 (6) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... s they related to the applicability of Rule 57CC of the Central Excise Rules and charging of an amount equal to 8% of the sale price of the final products if the inputs (and not capital goods) were used in the manufacture of both dutiable goods and exempted goods. The Larger period of limitation is invocable for demanding the duty as the Appellants No. 1 never disclosed to the Department about leaving the capital goods, in respect of which Modvat credit had been availed of, in the factory premises of the Appellants No. 2. The approval of ground plan of the factory of the Appellant No. 2 does not mean that Department was aware of the said fact as the Appellants No. 1 had paid the duty in respect of certain machines. In conclusion, both appeals were disposed of with the duty demand upheld on M/s. Majestic Auto Ltd. and the penalty reduced, while the penalty on M/s. Hero Briggs Stratton Auto Ltd. was set aside. - S/Shri S.S. Kang, Member (J) and V.K. Agrawal, Member (T) [Order per : V.K. Agrawal, Member (T)]. - The issue involved in these two appeals, filed by M/s. Majestic Auto Ltd. and M/s. Hero Briggs Stratton Auto Ltd. relates to the availability of MODVAT Credit of the duty pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t further the impugned capital goods were manufactured by others who had already paid duty thereon; that thus duty cannot be demanded from them who are not manufacturer of the said goods. He, further, mentioned that duty can also not be demanded under Rule 57S of the Central Excise Rules, 1944 because Rule 57S provides for recovery of the credit wrongly taken whereas the demand of duty is not on the premises that the credit was taken wrongly; that the amount demanded is neither the amount of illegal or wrong Modvat credit nor is the duty of excise and there is no recovery proceeding machinery in the Act and Rules; that in Pushpaman Forgings v. CCE, Mumbai-VII, 2002 (149) E.L.T. 490 (T) the Tribunal has taken the same view relying upon the judgment of the Madras High Court in Eternit Everest Ltd. v. Union of India, 1997 (89) E.L.T. 28 (Mad.) and Board's Circular B-42/1/96-TRU, dated 27-9-1996. He also contended that demand of duty under Rule 57U(4) is also not sustainable as the capital goods in question were not manufactured by the Appellants No. 1; that the demand of duty under Rule 57U(4) amounts to levy of duty of excise again illegally and without authority is borne out from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods are liable for confiscation; that the finding of connivance with Appellants No. 1 is patently wrong as had the duty been paid by Majestic Auto Ltd., the Appellants No. 2 could have taken the credit thereof; that in any case there being no proposal for confiscation of the goods, penalty under Rule 209A cannot be imposed. 5. Countering the arguments, Shri Vikas Kumar, learned Senior Departmental Representative, submitted that both the Appellants are independent entity, being limited companies having their own factory premises with separate Central Excise Registration; that the capital goods in respect of which credit has been taken may be used in the factory of the manufacturer or may be removed for home consumption or for export on payment of appropriate duty of excise leviable thereon; that provisions of Modvat rules are very clear that the capital goods should be used in the factory of the manufacturer who has taken the credit; that as the premises wherein the impugned capital goods are installed has been leased out to the Appellants No. 2, the capital goods, in respect of which Appellants No. 1 have availed of credit, are no more with them but are installed in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or home consumption or for export on payment of appropriate duty of excise leviable thereon or for export under bond, as if the capital goods have been manufactured in the said factory." 6.3 As the premises in which the capital goods are installed has now been leased to the Appellants No. 2 who are now in possession of the said premises, it cannot be claimed by the Appellants No. 1 that the capital goods are used in their factory. The capital goods are no more installed in the factory of the Appellants No. 1 and as these are now in the factory premises of another manufacturer (i.e. Appellants No. 2), the same have been removed from the factory for home consumption. In terms of provisions of Clause (ii) of sub-rule (1) of Rule 57S, the same should have been removed - (a) after intimating the Assistant Commissioner of Central Excise having jurisdiction over the factory; (b) after obtaining dated acknowledgement of the same; and (c) on payment of appropriate duty of excise leviable thereon as if such capital goods have been manufactured in their factory. Thus the Appellants No. 1 is liable to pay the duty on the impugned capital goods. A penalty is also imposable on them as they have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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