2001 (9) TMI 864 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on Finger tips, Air gripper, and extruded plate.
2. Classification of finger tips as inputs.
3. Requirement of declaration for availing Modvat credit on Air gripper and extruded plate.

Analysis:

Issue 1: Denial of Modvat credit on Finger tips, Air gripper, and extruded plate.

The appeals were filed against the denial of Modvat credit on Finger tips, Air gripper, and extruded plate. The Department denied Modvat credit on finger tips stating they are not inputs. Similarly, Modvat credit on Air gripper and extruded plate was rejected due to the absence of a proper declaration. The appellants contended that finger tips were necessary for handling electron guns, which are sensitive equipment. However, the authorities disagreed with this explanation. Regarding Air gripper and extruded plate, the Department insisted on a correct declaration as per Rule 57T and 57G, which the appellants failed to provide.

Issue 2: Classification of finger tips as inputs.

The dispute revolved around whether finger tips qualify as inputs for Modvat credit under Rule 57A. The Department argued that finger tips do not directly participate in the manufacturing process of electron guns and hence are not inputs. The appellants cited a Supreme Court case where gloves used by workmen in hot jobs were considered to be used in the course of manufacture. The Tribunal also referred to a case involving rubber plugs used in a similar context, where they were deemed eligible inputs for Modvat credit. Ultimately, the Tribunal held that finger tips, being essential for handling electron guns, qualify as inputs eligible for Modvat credit.

Issue 3: Requirement of declaration for availing Modvat credit on Air gripper and extruded plate.

The Department contended that since Air gripper and extruded plate were not specifically mentioned in the declaration under Rule 57T and 57G, they were not entitled to Modvat credit. The appellants argued that they had obtained clarification from the manufacturer, stating the items were equivalent to A Cylinder and G-4 cylinder, respectively. However, the authorities insisted on the mandatory nature of filing correct declarations. The Tribunal directed a re-examination of the issue concerning Air gripper and extruded plate, emphasizing the importance of verifying the description in the Bill of Entry and invoice for determining eligibility for Modvat credit.

In conclusion, the Tribunal allowed Modvat credit for finger tips as essential inputs in the manufacturing process. For Air gripper and extruded plate, further examination was ordered to verify the description in the relevant documents to determine their eligibility for Modvat credit. The appeals were disposed of accordingly.