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TMI Blog2004 (2) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... model vehicles Wagon-R and Baleno; that the components for the vehicles imported by M/s. Maruti Udyog Ltd. (MUL in short) were assessed to Customs duty and Additional duty under Heading 87.03 of the First Schedule to the Customs Tariff Act as complete vehicle applying Rule 2(a) of the Interpretative Rules and Public Notice issued by Ministry of Commerce; that MUL took Cenvat Credit of the Addition Customs duty paid on the components after receipt into their factory; that the imported components were thereafter sent to the various vendors, who are Appellants in the present proceedings, for manufacture, assembly of further components like seats, fuel, tanks, etc.; that at the time of sending of these imported components, MUL reversed the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that where the inputs are removed as such, outside the factory, the credit taken on the inputs is to be reversed; that the Larger Bench has observed as under: "The legal fiction of treating the inputs as having been manufactured by the recipients of the inputs was only to see that the manufacturer restores the original position by debiting the same rate of duty at which he had taken the credit." 3.2 The learned Advocate mentioned that the said decision of the Larger Bench has been followed by the Tribunal in the context of Second Explanation to Rule 57AB itself in Maruti Udyog Ltd. v. CCE, Final Order No. 443/2002-A dated 9-9-2002, 2003 (161) E.L.T. 248 (T); that the decision dated 9-9-2002 specifically covers the present matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; that the impugned Order confirms the duty demand both on Plant I and Plant II in respect of same inputs which is incorrect. He finally mentioned that penalty can not be imposed as none of the provisions of Rule 173Q of the Central Excise Rules, 1944 is attracted as the vendors - Appellants have taken credit of only that much amount which was indicated in the duty paying document; that M/s. Maruti Udyog Ltd. had intimated the Department about their understanding of provisions of Rule 57AB and procedure being followed by them; that since the Department did not specifically object to the procedure followed by M/s. MUL at any point of time, no penal provisions can be invoked against them. 5. Countering the arguments, Shri D.N. Choudhary, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % was legally wrong; that as the duty ought to have been paid was only 16%, the vendors were eligible to take the credit of the said duty which was leviable on the inputs and not more; that in the case of M/s. Kalyani Brakes Ltd., it is apparent that they had received brake parts falling under Heading 87.08 on which payment of duty was made at the rate of 16% whereas the brake parts received by them from MUL during the same period were received on payment of duty @ 40% and they had consulted M/s. MUL in this regard; that this goes to show clearly their collusion with MUL in wrongly availing of higher amount of Modvat Credit. The learned Senior Departmental Representative relied upon the decision in the case of Kerala State Electronics Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he components so imported by MUL were removed. In fact it is mentioned in the impugned order that the "inputs cleared by MUL, in these cases, were the components of the car kits which were imported by MUL and against which credit of CVD was availed of." Thus what was being removed by the components which were classified under Heading 87.03 by the Customs Department and as such their classification can not now be amended by the Excise Department when these are sent to vendors as such. Accordingly, there has been no wrong payment of duty by MUL and consequently no wrong availment of Cenvat Credit by the other Appellants. 7. The learned Advocate for the Appellants has contended that the decisions of the Larger Bench of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. Commissioner of Central Excise having jurisdiction over the factory and obtaining dated acknowledgement of the same from the factory for consumption or for export under bond as if such inputs have been manufactured in the said factory." 5. The Larger Bench of the Tribunal held that "the requirement of Rule 57F(1)(ii) is for payment of duty on the inputs received for home consumption where the inputs have not been used by the manufacturer. The legal fiction of treating the inputs as having been manufactured by the recipient of the inputs was only to see that the manufacturer restores the original position by debiting the same rate of duty at which he had taken the credit. The proviso to Rule 57F(1) clearly explains the rational for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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