Per V.K. Agrawal : The issue involved in this appeal filed by M/s. Rico Auto Industries Limited is whether the processed undertaken by them amount to manufacture and consequently whether they are eligible to take Modvat credit of the duty.

2. Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants received Rotor Oil Filter (ROF) in semi finished form from M/s. Rico Auto Industries Limited; that they had undertaken the process of broaching and drilling operations on the ROF which make them suitable for use by their customers like M/s. Hero Honda Limited; that they also received Gear Shaft Drum (GSD) from M/s. Rico Auto Castings Limited in semi finished condition; that the processes of outer turning, four-hole drilling and tapping are undertaken by the appellants with a view to make GSD readily usable by the customers; that they take Modvat Credit of duty paid on the semi finished ROF and GSD received by them; that after undergoing the operation on the semi finished ROF and GSD, the same are cleared by them on payment of duty of excise; that the Commissioner of Central Excise, under the impugned order, has disallowed them the Modvat Credit and demanded an equivalent amount besides imposing a penalty of equivalent amount on the ground that the processes undertaken by them do not amount to manufacture and as such the Appellants were not eligible to take Modvat credit of duty paid on the semi finished ROF and GSD. The learned Advocate, further, submitted that the operations undertaken by them to make GSD and ROF complete and finished amount to manufacture; that in terms of Note 6 to Section XVI and Section XVII of the Schedule to the Central Excise Tariff, conversion of incomplete or unfinished article which has the essential character of the finished or complete article, in complete or finished article shall amount to 'manufacture'; that by virtue of this deemed definition of 'manufacture', the machining operations undertaken by them would attract excise duty. Finally, he submitted that even if the processes undertaken by them do not amount to manufacture, clearance of ROF and GSD would be treated as clearance of inputs as such under Rule 57F(1)(ii) of Central Excise Rules and the Appellants would be liable to reverse the credit taken; that during the period in question 1.11.95 to 30.11.95, they had paid total excise duty of Rs. 2,76,18,248/- in respect of clearance of ROF and GSD whereas they had taken Modvat Credit amounting to Rs. 2,56,55,259/- only; that as such they have already reversed the credit more than the Modvat credit taken by them and accordingly no further duty can be demanded from the Appellants; that in any event, the demand is time barred as the show cause notice was issued on 1.2.2000 on the basis of invoices on the strength of which the Appellants had taken the credit and under which they had cleared the finished goods and these documents were always available with the Department from the monthly RT12 returns; that it is settled legal position that when the duty demand has been raised based on the very statutory documents filed by the Assessee with the Department, extended period of limitation cannot be invoked. Reliance has been placed on the decision in the case of ITI Limited vs. CCE, Final Order No. A/2631/2001-NB dated 30.3.2001 [reported in 2001 (45) RLT 163 (CEGAT)]. We also heard Shri Rajeev Tandon, learned SDR.

3. We have considered the submissions of both the sides. The Modvat credit taken by the Appellants in respect of ROF and GSD has been disallowed on the ground that the inputs were cleared without subjecting them to manufacturing process and the inputs were not used in or in relation to the manufacture of any final products. We are of the view that without going into the question as to whether the processes undertaken by the Appellants on ROF and GSD amount to manufacture or not, the appeal can be decided on the basis of the provisions of Rule 57F(1)(ii) of Central Excise Rules,