Commissioner of Customs and Vs. Videocon Appliances Ltd.

1. the revenue challenges the order of the commissioner (appeals) who has held that modvat credit is relatable to inputs used in the manufacture of electric motors for washing machines, is admissible and can be utilised for payment of duty on clearance of washing machines by the respondents herein and that out of the total credit of rs. 1,45,882.53 only that quantum of credit relatable to inputs used in manufacture of electric motors other than the ones meant for washing machines will be liable to be reversed and reduced the penalty of rs. 25,00,000/- imposed upon the assesses by the assistant commissioner to rs. 1,00,000/-.3. according to the revenue the provisions of rule 57f(4) of the central excise rules, 1944 as it stood during the period in dispute (march, 1995) did not permit the appellants to avail credit of duty paid on inputs for electric motors only for clearances of electric motors and not for clearances of washing machines. we find that the respondents herein were permitted to merge the electric motors account with the washing machines account since electric motors were an integral part of washing machines and that inputs, electric motors for washing machines were covered by declarations filed in terms of rule 57a of the central excise rules, 1944. therefore even if the revenue's contention is accepted and the respondents directed to reverse the credit availed on electric motors, such credit would be available to them for payment of duty on washing machines at the time of their clearance. therefore the exercise is revenue neutral. in this view of the matter we hold that interference with the impugned order is not called for, and accordingly uphold the same and reject the appeal.