ORDER
Gowri Shankar, Member (Technical)
1. The applicant manufactures electric storage batteries (batteries for short). It sells these batteries without charging them to dealers. Manufacturers of motor vehicles, who buy these batteries from the applicant required them to be charged as they are to be fitted immediately into these motor vehicles. In the case of sales to such buyers, applicant got the batteries charged from a job worker, and, after return by the job worker, sends them to buyers. The applicant followed the procedure prescribed under Rule 57F(4) for this purpose. As required by Rule 57F(6), the applicant debited 10% of the value of the goods in its Modvat account while sending out the batteries to the job worker. It cancelled the debit when it received back the batteries.
2. The appeal is against the order of the Commissioner (Appeals) confirming the view of the Assistant Commissioner that the provisions of Rule 57F(4) were not available, for the reason that there is no difference between the uncharged and charged batteries and denying the credit which the applicant made of the duty debited.
3. After hearing both sides, we find that the applicant has a strong prima facie case. No doubt, by application of the interpretative rules, uncharged battery itself is a complete product classifiable under heading 85.07. However, where a buyer placed an order for charged battery we would prima facie say that it is the charged battery that is sold to him. Therefore, the charged battery is a different article from an uncharged batter.
4. Even we assume, as the Assistant Commissioner concludes that the provisions of Rule 57F were not available for the reason that the uncharged battery is a complete product, what would follow is that the applicant could not have applied Rule 57F (4). There was therefore no question of making any debit when it sends out the battery, and it was entitled to cancel the debit which it wrongly made. We also take note of the fact that the applicant intimated to the department by its letter of November 1988, of its proposal to follow Rule 57F (4), and that the demand has arisen as a result of the proceedings initiated nine months later in respect of clearances which have taken place in between.
5. Accordingly, we waive deposit of duty of Rs 1.23 crores approx and the penalty of Rs 20.02 lakhs and stay their recovery.