2003 (10) TMI 417 - AT - Central Excise

Summary

Issues:
Validity of allowing Modvat credit on ramming mass without evidence of use in manufacturing.

Analysis:
The appeal concerns the validity of allowing Modvat credit on ramming mass by the Commissioner (Appeals) without sufficient evidence of its use in manufacturing the final product. The Revenue argues that no evidence was presented to establish the use of ramming mass by the respondents in manufacturing. The learned Counsel for the respondents relies on various Tribunal and Apex Court decisions to support the eligibility of items used in manufacturing for Modvat credit. However, the crucial point is that the manufacturer must prove the actual use of the item in or in relation to manufacturing the final product to claim Modvat credit.

The Tribunal notes that while the law allows Modvat credit on items used in manufacturing, the manufacturer must demonstrate the actual use of the item in question. In this case, the respondents failed to provide evidence of how the ramming mass was used in their factory. Merely citing previous cases where Modvat credit was allowed on similar items is not sufficient without proving the specific use of the item in their manufacturing process. The Commissioner (Appeals) also did not assess the actual use of the ramming mass before allowing the credit, leading to the reversal of the original order without proper examination.

Considering the lack of evidence regarding the use of ramming mass in manufacturing, the Tribunal concludes that the Commissioner (Appeals) decision cannot be upheld. The matter is remanded back to the Commissioner (Appeals) for a re-examination of the Modvat credit availability on ramming mass. The Commissioner is directed to investigate and determine the actual use and purpose of the ramming mass in the respondents' factory before making a decision on the Modvat credit eligibility. As a result, the impugned order is set aside, and the appeal of the Revenue is allowed for further review.