2002 (9) TMI 748 - AT - Central Excise

Summary

Issues involved:
Whether the entire duty of Excise paid on Residual Fuel Oil (RFO) used as inputs is available as Modvat Credit or the Credit is restricted to the amount of Excise duty calculated at the rate of 10% ad valorem.

Analysis:
In this appeal, the issue revolved around the availability of Modvat Credit on Residual Fuel Oil (RFO) used as inputs. The Appellant, a manufacturer of Polyster Chips, contended that the Asstt. Commissioner and the Commissioner (Appeals) restricted the Modvat Credit on RFO to 10% ad valorem, citing classification under Sub-heading 2713.30 of the Central Excise Tariff Act. The Appellant argued that previous Tribunal decisions, such as Camphor & Allied Products Ltd. v. CCE, Lucknow and CCE, Chandigarh v. Arti Steels Ltd., supported their claim that RFO should not be restricted to 10% under Notification No. 14/97. The Appellant's representative highlighted the broader scope of Chapter Heading 2713.30 compared to the narrower scope of the notification, indicating that the restriction did not apply to RFO.

The Tribunal analyzed Notification No. 14/97, which limited Modvat Credit for specified products under Chapter 27 of the Central Excise Tariff Act. Referring to the Arti Steels Ltd. case, the Tribunal affirmed that RFO was not covered by the notification's restrictions on Modvat Credit. The Tribunal concurred with the decision in Camphor & Allied Products case, emphasizing that Sub-heading 2713.30 encompassed various products beyond those listed in the notification. Therefore, the Tribunal concluded that the restriction under Notification No. 14/97 did not extend to RFO received by the Appellants. Consequently, the Tribunal set aside the impugned order and allowed the appeal based on the precedents established in the aforementioned cases.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the arguments presented by both parties, the legal framework involved, and the Tribunal's reasoning leading to the final decision in favor of the Appellant.