2002 (2) TMI 945 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit on High Speed Diesel Oil.
2. Interpretation of Rule 57A and Rule 57B regarding eligible inputs.
3. Admissibility of Modvat credit on HSD oil prior to specific dates.
4. Tribunal's remand for reconsideration of delay in filing declaration under Rule 57G.
5. Revision application filed by Revenue challenging Tribunal's decision.

Eligibility of Modvat Credit on High Speed Diesel Oil:
The case involved a dispute regarding the eligibility of Modvat credit on High Speed Diesel (HSD) oil as an input under Rule 57A of the Central Excise Rules, 1944. The Respondents, manufacturers of cotton yarn and man-made yarn, had availed Modvat credit on HSD oil. The Assistant Commissioner disallowed the credit, stating that HSD oil was not specified as an eligible input under Rule 57A. The Commissioner (Appeals) upheld this decision, except for allowing credit prior to a certain date based on a Tribunal judgment. The Tribunal, in its main order, held that credit on HSD oil was required to be given as it was an eligible input under Rule 57A.

Interpretation of Rule 57A and Rule 57B regarding Eligible Inputs:
The Assistant Commissioner noted that the word 'inputs' in Rule 57B(1) referred only to goods specified in a Notification under Rule 57A. As HSD oil was not specified in Notification No. 5/94-C.E. (N.T.) under Rule 57A, he disallowed the Modvat credit on HSD oil. The Respondents argued that despite the exclusion in Rule 57A, HSD oil should be eligible for credit under Rule 57B as long as it was used as fuel in the manufacturing process. The case involved a detailed analysis of the application of these rules to determine the eligibility of HSD oil for Modvat credit.

Admissibility of Modvat Credit on HSD Oil Prior to Specific Dates:
The Commissioner (Appeals) modified the Assistant Commissioner's order, allowing credit on HSD oil prior to a specific date based on a Tribunal judgment. This decision was challenged by the Revenue, leading to a remand by the Tribunal for reconsideration of the request for condonation of delay in filing the declaration under Rule 57G. The Tribunal emphasized the need to pass a speaking order considering both the delay issue and the merits of the case.

Tribunal's Remand for Reconsideration of Delay in Filing Declaration under Rule 57G:
Following the Revenue's appeal, the Tribunal remanded the matter to the original authority for de novo consideration of the delay in filing the declaration under Rule 57G. The Tribunal's decision highlighted the importance of addressing procedural aspects such as filing requirements in addition to the substantive issues of Modvat credit eligibility.

Revision Application Filed by Revenue:
The Revenue filed a Revision application challenging the Tribunal's decision regarding the eligibility of Modvat credit on HSD oil. The Hon'ble High Court directed the Tribunal to frame the question of law for consideration, leading to further proceedings for answering the legal question raised in the case. The matter was presented before the Hon'ble High Court for a decision on the legal issues involved in the dispute.