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2003 (5) TMI 378 - AT - Central Excise
Issues:
Rectification of mistake in the Tribunal's Final Order regarding the recovery of Modvat credit on inputs contained in reprocessed granules cleared at nil rate of duty. Analysis: The Revenue filed an application seeking rectification of a mistake in the Tribunal's Final Order related to the recovery of Modvat credit on inputs contained in reprocessed granules cleared at nil duty rate. The issue arose from the show cause notice for recovery of Modvat credit under Rule 57C on the quantity of inputs in reprocessed granules. The Tribunal had previously held that duty was payable on sub-standard granules not fit for use in manufacturing BOPP films cleared for home consumption. The Revenue argued that the Tribunal's decision was based on a different issue as the show cause notice did not demand duty on reprocessed granules. The Revenue contended that since reprocessed granules are chargeable at nil duty rate, Modvat credit reversal for inputs in them was necessary. Opposing the Revenue's prayer, the Respondent's counsel argued that the Modvat credit should not be denied for inputs contained in waste as per Rule 57D, even if the waste is used for further processing. The counsel emphasized that the provisions of Rule 57C should not apply in such cases. Upon considering both sides' submissions, the Tribunal analyzed Rule 57D, which stipulated that Modvat credit cannot be denied or varied for inputs contained in waste arising during manufacturing. The Tribunal noted that waste generated during production is exempt from duty payment under Notification No. 53/88-C.E. The Revenue's argument that Modvat credit should be denied for reprocessed granules cleared at nil duty rate was initially accepted but later reversed by the Tribunal. The Tribunal clarified that duty is payable on sub-standard granules cleared for consumption but ruled out the need for Modvat credit reversal based on Rule 57D provisions. Consequently, the application filed by the Revenue for rectification was rejected.
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