Judgment:
2. The appellant filed this appeal against adjudication order passed by the Commissioner of Central Excise whereby Modvat credit on defective colour picture tubes which were sent to the manufacturer for repair was denied. The demand was also confirmed in respect of the valuation of the Television sold by M/s National Panasonic of India by taking into consideration the price in other States as the M/s National Panasonic were selling the televisions in UP at lower price as goods were under exemption from Sales Tax.
3. The appellant also challenged the denial of benefit of Modvat credit taken on four cabinet moulds. In respect of other demands confirmed by the adjudicating authority the appellants were not challenged these demands. The only contention of the appellant is that since the duty in respect of these demands was paid even prior to show-cause notice therefore, the penalty equal to the amount of duty confirmed is not sustainable.
4. In respect of Modvat credit on defective colour picture tubes, the contention of the appellant is that they were receiving colour picture Tubes from Samtel Colour Ltd. and were availing the benefit of credit in respect of duty paid on colour picture tubes. Some of the picture tubes found to be defective and these were sent to the manufacturer for repair and after repair they were getting the picture tubes and the Revenue was denying this credit on the ground that the manufacturer of the picture tube that is Samtel Colour Ltd. in fact cleared new picture tubes and the picture tubes received by the appellants are not the same which were returned as defective. The contention is that in case of Samtel Colour Ltd. on this ground the demand was raised and the Commissioner (Appeals) set aside the demand raised on Samtel on the ground that under the guise of repairs picture tubes they were clearing the new tubes. The Revenue filed appeal against this order and the Tribunal vide Final Order in the case of CCE v. Samtel Color Ltd. reported as 2001 (135) ELT 288. The Tribunal held that the activity undertaken by the Samtel, colour picture tube is that of repair and not of manufacture. The contention is that as the same allegation against the manufacturer was found not sustainable, therefore, in the present case credit cannot be denied.
5. The contention of the Revenue is that there is no evidence produced by the appellant that they have received the same picture tubes which were sent to the manufacturer for repair.
6. We find that the Tribunal in the case of Samtel Color Ltd. (supra) held that during repair of the colour picture tubes there was loss of identity during repair operations, salvage and inter-mixing of identical parts taking place between old and new tubes but at the end a serviceable picture tube emerging in place of a defective picture tube.
Therefore, the activity undertaken by the manufacturer is that of repair and not of manufacture. In view of the above decision of the Tribunal as the demand raised against the manufacturer of tubes on similar grounds is set aside therefore, the appellants are entitled for the credit and the credit cannot be denied on the ground that they had received some other picture tubes. In view of the above decision of the Tribunal the demand in respect of Modvat credit on defective colour picture tubes which were sent to repair and received back is not sustainable hence set aside.
7. In respect of the valuation of the TV sets sold to National Panasonic of India, the contention of the appellant is that dispute is in respect of the TV sold in UP and during the relevant period there was no Sales Tax in T.V. in U.P. Therefore, the price of the TV sets which are declared in other States except UP is different as in those States the Sales Tax is leviable. The contention of the appellant is that in similar situation the Tribunal set aside the order passed in the case of CCE v. Videocon International Ltd. and Revenue filed appeal before Hon'ble Supreme Court and Hon'ble Supreme Court vide order dated 12th January 2005 reported as 2005 (180) ELT 312 dismissed the appeal.
In view of the above decision of the Hon'ble Supreme Court, the demand is not sustainable.
8. The contention of the Revenue is that there is a difference in the price of TV sets which were sold in UP and other States therefore, the demand was rightly made. We find that this issue is now settled by the Hon'ble Supreme Court in the case of M/s. Videocon International Ltd. The Hon'ble Supreme Court held as under: "In all these matters the concerned Assessee was only selling its products through their Depots. In some States where the Assessee had to pay sales tax they deducted the sales tax paid from the price of the goods. In States where the Assessee had benefit of exemption from sales tax, they paid sales tax on price without deducing (sic) the sales tax element. The Department contended that as the price was higher in that State, that price should be applicable for sales throughout India. Such a stand is clearly untenable.
The Assessees, in all these cases have succeeded, and rightly so, before the Collector (Appeals) and the Tribunal. The position being so clear it is surprising that a decision to file Civil Appeals was taken. We see no substance in these Appeals. They all stand rejected. However, there will be no order as to costs." In view of the decision of the Hon'ble Supreme Court, we find merit in the contention of the appellant. The demand in this regard is also set aside.
9. Now, we take up the issue regarding denial of Modvat credit on four cabinet moulds. The appellant made import of moulds and availed the credit, the moulds were sent to their job worker in 1994 after due permission from the competent authority. Thereafter in respect of moulds sent to job workers, from time to time, the appellants were getting extension from Revenue. In the year 1998 as the moulds were received back in their factory and still lying in their factory. The contention is that the credit has been denied on the ground that these are not being used by the appellant. The contention is that as these moulds were used in the year 1994 to 1998 by their job worker and now the moulds are lying in their factory and therefore, the credit cannot be denied. The Revenue relied upon the findings of the lower authorities. In this regard the Revenue is not disputing that the moulds are used from 1994 to 1998 by the job worker and moulds are still with the appellant and were lying in their factory. It is not the case of the Revenue is that moulds are sold by the appellant. In these circumstances, the credit cannot be denied on the ground that for some period the moulds were lying in their factory without use. Therefore, the demand in this regard is also set aside.
10. In respect of the penalty imposed on the appellant where the duty was paid even prior to show-cause notice. We find that the Tribunal in the case of CCE v. Machino Montell (I) Ltd., 2004 (158) ELT 466 held that where duty has been paid voluntarily prior to issuance of show-cause notice, the penalty is not impasable. In these circumstances, the penalty imposed in respect of the confirmed demand is also not sustainable and set aside. The appeals are disposed of as indicated above. The appellants are entitled for consequential relief, if any in accordance with law.