S.D.O. Coil Fabrication Vs. Collector of C. Ex. - Court Judgment

Excerpt:
1. appellants/applicants are an undertaking of the punjab state electricity board, engaged in the manufacture of coils of copper/aluminium which are captively used in the repair of transformers in various installations. modvat credit had been taken in respect of duty paid on the material consisting of copper coils and aluminium coils. the department had earlier treated such activity as resulting in the manufacture of dutiable products. subsequently, as stated by the learned counsel with reference to the submissions in the appeal memorandum, this stand was given up by the department following a series of decisions holding that the production of transformer coils is not an excisable activity. the additional collector passed the impugned order holding the modvat credit of rs. 62,041.04 taken in rg 23 part ii was reversible as the inputs in question had been transferred by them.there is also an observation that the proceedings deserved to be dropped. while so dropping the proceedings in view of the finding that the coils produced by the appellants/applicants are not chargeable to duty, a direction was given that modvat credit should be debited in the rg 23 part ii account. the matter was carried in appeal to the collector (appeals) by the appellants resulting in the setting aside of the order of the additional collector. the department challenged the order-in-appeal passed by the collector (appeals) on the ground that the latter authority had no jurisdiction to hear an appeal against the order passed by the additional collector as such jurisdiction lay with the tribunal. this ground taken by the department before the tribunal was accepted and hence the appellant had filed the present appeal before this forum. in view of the alternate remedy pursued before the collector (appeals) and the time taken in disposal of that appeal and subsequent proceedings, the present appeal could not be filed in time before the tribunal. this has been explained by the applicants in the condonation of delay application. since the delay is due to the technical reason and the fact that the appellant was pursuing the appeal remedy though in the wrong forum, the request for condonation merits acceptance and i order accordingly and condone the delay.2. in the stay petition connected with the appeal, waiver of pre-deposit in cash of the amount equal to the sum required to be reversed in the rg 23 part ii account as directed by the additional collector in the impugned order has been sought. on a question from the bench, the learned counsel for the applicants stated that though the order under challenge only directed the reversal of the modvat credit, the departmental authorities are insisting on equivalent amount being paid in cash as the applicants had closed the rg 23 account long back in view of the non-dutiable nature of their product. since the appeal filed before the tribunal is against the order-in-original passed by the additional collector which only directs the reversal of the credit, the insistence by the department as reported by the learned counsel for their depositing the amount in question in cash is not easy to follow.the order itself does not require any amount to be paid in cash. in the circumstances, the stay petition requesting for waiver of pre-deposits of any amount in cash appears to be superfluous. it is however, made clear that the order under challenge in the present proceedings not requiring such pre-deposit, it will not be open to the department to insist on such pre-deposit in cash. the stay petition is disposed as above.

Judgment:
1. Appellants/Applicants are an Undertaking of the Punjab State Electricity Board, engaged in the manufacture of coils of Copper/Aluminium which are captively used in the repair of transformers in various installations. Modvat credit had been taken in respect of duty paid on the material consisting of Copper Coils and Aluminium Coils. The Department had earlier treated such activity as resulting in the manufacture of dutiable products. Subsequently, as stated by the learned Counsel with reference to the submissions in the appeal memorandum, this stand was given up by the Department following a series of decisions holding that the production of transformer coils is not an excisable activity. The Additional Collector passed the impugned order holding the Modvat credit of Rs. 62,041.04 taken in RG 23 Part II was reversible as the inputs in question had been transferred by them.

There is also an observation that the proceedings deserved to be dropped. While so dropping the proceedings in view of the finding that the coils produced by the appellants/applicants are not chargeable to duty, a direction was given that Modvat credit should be debited in the RG 23 Part II Account. The matter was carried in appeal to the Collector (Appeals) by the appellants resulting in the setting aside of the order of the Additional Collector. The Department challenged the Order-in-Appeal passed by the Collector (Appeals) on the ground that the latter authority had no jurisdiction to hear an appeal against the order passed by the Additional Collector as such jurisdiction lay with the Tribunal. This ground taken by the Department before the Tribunal was accepted and hence the appellant had filed the present appeal before this forum. In view of the alternate remedy pursued before the Collector (Appeals) and the time taken in disposal of that appeal and subsequent proceedings, the present appeal could not be filed in time before the Tribunal. This has been explained by the applicants in the Condonation of Delay Application. Since the delay is due to the technical reason and the fact that the appellant was pursuing the appeal remedy though in the wrong forum, the request for condonation merits acceptance and I order accordingly and condone the delay.

2. In the stay petition connected with the appeal, waiver of pre-deposit in cash of the amount equal to the sum required to be reversed in the RG 23 Part II account as directed by the Additional Collector in the impugned order has been sought. On a question from the Bench, the learned Counsel for the applicants stated that though the order under challenge only directed the reversal of the Modvat credit, the Departmental Authorities are insisting on equivalent amount being paid in cash as the applicants had closed the RG 23 account long back in view of the non-dutiable nature of their product. Since the appeal filed before the Tribunal is against the Order-in-Original passed by the Additional Collector which only directs the reversal of the credit, the insistence by the Department as reported by the learned Counsel for their depositing the amount in question in cash is not easy to follow.

The order itself does not require any amount to be paid in cash. In the circumstances, the stay petition requesting for waiver of pre-deposits of any amount in cash appears to be superfluous. It is however, made clear that the order under challenge in the present proceedings not requiring such pre-deposit, it will not be open to the Department to insist on such pre-deposit in cash. The stay petition is disposed as above.