1 cexa-2.06 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CENTRAL EXCISE APPEAL NO. 2 OF 2006 The Commissioner of Central Excise. ... Appellant. V/s. M/s.Nylocraft Precision Plastics Pvt.Ltd. and others. ... Respondents. A.S.Rao with S.D.Bhosale for the appellant. H.G.Dharmadhikari for the respondents. CORAM : V.C.DAGA AND R.M.SAVANT, JJ. DATED : 31st August 2010. P.C. : Heard learned counsel for the appellant and learned counsel for the respondent. Perused appeal. 2. This appeal has been admitted vide order dated 24th January, 2006 to consider the following substantial questions of law: “1. Whether CESTAT was correct in law in holding that job worker would be eligible for modvat credit on capital goods not owned by them even when such capital goods were received under Rule 57S(6) of the erstwhile Central Excise Rules, 1944 and not under documents prescribed under Rule 57G(3) of Central Excise Rules, 1944 and even when the statutory procedure to be followed in 2 cexa-2.06 terms of Rule 57T(1) & (2) read with Rule 57R(3) of Central Excise Rules, 1944 were not complied with? 2. Whether CESTAT was correct in law in holding that demand is barred by limitation when the Central Board of Excise and Customs vide its Circular No.170/4/9 dated 23.01.1996 had clarified that proportionate cost of patterns is to be included in the assessable value of the casting and when the demand pertains to period after 23.01.1996 and when the respondent No.1 working under self assessment, had suppressed the fact that mould supplied by respondent No.2 were used for manufacture of finished goods? 3. Whether CESTAT was correct in law in holding that no penalty is leviable on respondent Nos.1, 2 & 3 when there was deliberate suppression / misdeclaration with intention to evade payment of central excise duty on the value representing the amortisation cost and when respondent No.2 prepared invoice No.2266 dated 03.02.1997 though the mould was not in their possession which amounts to collusion and fraud with intention to avail inadmissible credit? 3. Taking second and third questions first for consideration, learned counsel for both parties agree that the issue relating to the invocation of the extended period of limitation is covered by the judgment of the Apex Court in the case of Jaiprakash Industries Ltd. v. Commissioner of C.Ex., Chandigarh, 2002 (146) ELT 481 (SC); wherein the Apex Court ruled that wherever there is a scope to believe that the goods are not excisable to duty and, therefore, no licence is required to be taken out, then the extended period of limitation for demand under section 11A is not 3 cexa-2.06 applicable. Initially, the judgment of the Tribunal in the case of Flex Industries, 1997 (91) ELT 120 was against the assessee and later decision of the Tribunal, in the case of Creative Cartons, 1999 (106) ELT 79, answered the issue in favour of the assessee. As such matter was required to be referred to the larger bench. The larger bench of the Tribunal, ultimately, held in favour of the Revenue. In this fact situation, the judgment of the Apex Court in the case of Jaiprakash Industries Ltd. (supra) is very much applicable. The bona fide doubt as to the non-excisability of goods due to divergent views of the Tribunal could not have allowed the department to invoke extended period of limitation. In this view of the matter, question Nos.2 and 3 are rightly answered by the Tribunal in favour of the assessee and against the Revenue. 4. So far as first question is concerned, the same is squarely covered by the judgment of the Tribunal in the case of Modernova Plastyles P.Ltd. And Mirc Electronics Ltd. v. Commissioner of Central Excise, 2004 (112) ECR 660. The said judgment of the Tribunal has been accepted by the Revenue. In this view of the matter, first question is also answered in favour of the assessee and against the Revenue. 5. Appeal stands disposed of accordingly with no order as to costs. (R.M.SAVANT, J.) (V.C.DAGA J.)