2002 (3) TMI 391 - AT - Central Excise

Summary

Issues:
- Eligibility of Modvat credit on waste generated in the manufacturing process of gas filled bulbs.

Analysis:
1. The appeal was filed by the Revenue against the order passed by the Commissioner (Appeals) regarding the eligibility of Modvat credit. The Commissioner held that since the goods specified as final products were cleared on payment of duty, the appellants could take Modvat credit on inputs used in their manufacture. The respondents were engaged in manufacturing gas filled bulbs and other related products, and they had availed Modvat credit under Rule 57A of Central Excise Rules, 1944. The Revenue contended that as the final product, gas filled bulbs, was exempt from duty, the respondents were not eligible for Modvat credit on inputs. The Revenue argued that the final product had been defined under Rule 57A and, in this case, it was the gas filled bulbs, not the waste generated in the manufacturing process.

2. The respondent's counsel referred to a clarification by the Central Board of Excise & Customs, stating that waste and scrap could be considered "final products" eligible for credit under Rule 57AA(c). The counsel also cited a Tribunal decision in a similar case where Modvat credit was allowed on waste and scrap. The Tribunal held that waste and scrap could be considered final products, and the credit on inputs used in their manufacture was admissible. The respondent argued that the clarification regarding Cenvat credit was equally applicable to Modvat credit, and therefore, the impugned order should be upheld.

3. The Tribunal considered the facts of the case, where waste was generated in the manufacturing process of gas filled bulbs, and the waste was cleared by the respondent on payment of duty. The Tribunal noted that waste was a specified item under Rule 57A and that waste, being the final product on which duty was paid, made the respondent eligible to take Modvat credit on inputs. The Tribunal supported its decision by referring to the clarification by the CBEC and the previous Tribunal decision allowing credit on waste and scrap. Therefore, the Tribunal rejected the appeal filed by the Revenue, upholding the eligibility of Modvat credit on waste generated in the manufacturing process of gas filled bulbs.

In conclusion, the Tribunal's judgment clarified the eligibility of Modvat credit on waste generated in the manufacturing process of gas filled bulbs, emphasizing that waste could be considered a final product for the purpose of availing credit on inputs used in its manufacture. The decision was supported by relevant legal provisions, clarifications, and previous Tribunal rulings, ultimately rejecting the Revenue's appeal and affirming the respondent's right to claim Modvat credit on the waste cleared on payment of duty.