M/S. ICHALKARANJI MACHINE CENTRE PVT. LIMITED. versus COLLECTOR OF CENTRAL EXCISE, PUNE

Citation: [2004] SUPP. 6 S.C.R. 858 · Decided: 10-12-2004 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Dismissed

Judgment (excerpt)

A 
MIS. ICHALKARANJI MACHINE CENTRE PVT. LIMITED. 
B 
v. 
COLLECTOR OF CENTRAL EXCISE, PUNE 
DECEMBER I 0, 2004 
[S.N. V ARIA VA, DR. AR. LAKSHMANAN 
AND S.H. KAPADIA, JJ.] 
Central Excise and Salt Act, 1944 : 
C 
Section I/A-Rule 92 of the Central Excise Rules, 1944-Appellant 
opted/or MODVAT scheme-Without opting out-Inputs used exempt front 
duty-Cleared final products on concessional rate of duty-Wilful suppres-
sion-Extended period, invoking of-Demand of differential Excise duty, 
penalty and confiscation-Held, valid and justified-Notification No. 175 
D ICE dated 1.3.1986. 
Appellant, manufacturer inter alia of gear boxes and gear box 
covers, opted for MODVAT scheme for the year 1986-1987 and took 
credits for input duty on products falling under Chapter 7209, 7203 and 
7203.20 as inputs. They continued to avail the MODV AT facility for the 
E year 1987-1988. After getting the classification list approved at 
concessional rate of duty, cleared the final products under sub-heading 
90.24 and under sub-heading 84.23 on paying duty at concessional rate, 
as approved. Show-cause notice under Section 1 lA, invoking extended 
F 
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period, demanding differential duty was issued for clearing at 
concessional rate of duty final products made from items which were 
exempt from duty. Not satisfied with the reply filed by the appellant, 
the Additional collector of Central Excise imposed with penalty and 
confiscation of goods subject to redemption on payment of fine stipu-
lated. The CEGA T refused to interfere with the order. Hence this 
appeal. 
It was contended by the appellant that they had availed of the 
MODV AT credit as they had not withdrawn the declaration filed by 
them and there was no wilful suppression as the department was aware, 
on the basis of their accounts, that they were not availing the MODV AT 
H credit and as such the department erred in invoking the extended period 
858 
ICHALKARANJI MACHINE CENTRE PVT.LTD. v. COLLECTOR OF C.E., PUNE [KAPADIA, J.] 859 
for demanding excise dJty. 
A 
Dismissing the appeal, the court 
HELD : 1.1. The input being exempt from duty MODY AT credit 
was inadmissible and having not availed the MODY AT credit on the B 
input steel bars, the appellant were not entitled to clear final products 
at concessional rate of duty. [864-D) 
1.2. The appellant partly cleared the final product at concessional 
rate without utilizing the credit in the payment of duty on final product 
and partly on the basis of credit, which was not admissible. The demand 
of differential Excise duty, penalty and confiscation subject to payment 
of redemption fine valid and justified. (864-G-H; 865-A) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 243 l of 
1999. 
From the Judgment and Order dated 17.9.98 of the Central Excise 
Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O. No. E/ 
1863/98-Bl in A. No. E/829 of 1992-Bl. 
Santosh Paul, Rajeev Sharma, Sandeep Chhabra and M.J. Paul for the 
Appellant. 
G.E. Vahanvati, Solicitor General, A. Sobba Rao, Devadatt Kamat and 
B. Krishna Prasad for the Respondent. 
The Judgment of the Court was delivered by 
KAPADIA, J.: This is an appeal by the assessees under section 35L(b) 
c 
D 
E 
F 
of the Central Excise and Salt Act, 1944, against the final judgment and 
order No. E/1863/98-Bl dated 17.9.1998 passed in Appeal No. E/829/92-
G 
BI by the Customs Excise & Gold (Control) Appellate Tribunal, New Delhi, 
imposing inter a/ia duty amounting to Rs. 3. l 5 lacs and denying exemption 
under Notification No. 175/86/CE dated 1.3.1986. 
Briefly stated, the facts are as follows : 
H 
860 
SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R. 
A 
The appellants are the manufacturers of components of. machinery 
falling under chapter 9024.90. They also manufacture gear boxes and gear 
box covers falling under chapter 8483.00 of the schedule annexed to the 
Central Excise Tariff Act, 1985. In order to manufacture the aforestated 
items, the appellants use iron and steel products falling under chapter 7209, 
B 7203 and 7203.20 as inputs. The appellants are having permanent small 
scale industry registration granted by D.I.C., Kolhapur. 
Being a small scale industry, the appellants were entitled to the benefit 
of Central Excise Notification No. 175/86-CE dated 1.3.1986. 
C 
For the financial year 1986-87, the appellants had opted for the Modvat 
D 
E 
Scheme and took credit of input duty on iron and steel products falling under 
continued to 7209, 7203 and 7203.

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