2003 (7) TMI 570 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit of countervailing duty for Colour Proofing Film used in manufacturing Gravure Printing Cylinders.

Analysis:
The case involved the denial of Modvat credit of countervailing duty for Colour Proofing Film used in the manufacture of Gravure Printing Cylinders. The authorities had disallowed the credit, alleging that the film was not used in or in relation to the manufacture of the final product as the proofing was taken after the completion of cylinder manufacture. The adjudicating authority considered the film's use as post-manufacturing activity, while the Commissioner (Appeals) held it was used before the start of the GPC manufacturing process.

In the appeal, it was argued that the Commissioner's finding went beyond the show-cause notice's scope, contending that the proofing activity was integral to the final product's manufacture. Reference was made to the Supreme Court's decision in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. STO and the Tribunal's Larger Bench decision in Union Carbide India Ltd. v. CCE to support the claim that the film was used in relation to GPC manufacturing. The Tribunal's authorized representative reiterated these grounds, while the JDR supported the impugned order's findings.

Upon examination, it was found that the Colour Proofing Film's use in GPC manufacturing was integral and necessary. The representative explained that different GPCs with various colour designs were required for multi-coloured printing, emphasizing the film's essential role in the process. The Tribunal concluded that the film's use was indeed connected to GPC manufacturing, aligning with the cited legal precedents. Consequently, the impugned order was set aside, and the appeal was allowed.