2004 (3) TMI 654 - AT - Central Excise

Summary

Issues:
1. Entitlement to duty exemption on fabrics under Notification No. 67/95 for clearances to job workers.
2. Claim for Modvat credit on duty paid on fabrics against duty payable on made-ups.

Analysis:
1. The first issue revolves around the appellants' claim for duty exemption on fabrics under Notification No. 67/95 for clearances to job workers. The appellants argued that they should be exempt from duty based on captive use, but the tribunal found that the specific condition in the notification regarding the use of inputs within the factory of production does not support their claim. Therefore, the claim for exemption under the said notification was disallowed.

2. The second issue concerns the claim for Modvat credit on duty paid on fabrics against duty payable on made-ups. The appellants contended that they should be allowed to offset the duty paid on fabrics against the duty payable on made-ups, even though the prescribed Modvat credit procedure was not followed due to the goods initially being cleared for export. The tribunal referred to previous decisions, including Bharat Wagon & Engg., Ajay Industrial Corporation, and observations from the Apex Court, to support the allowance of Modvat credit in such situations. Despite the absence of specific rules for such cases, the tribunal allowed Modvat credit for basic and additional excise duty paid on fabrics to be utilized for payment of duty on made-ups, citing precedents and legal reasoning from previous cases.

In conclusion, the tribunal allowed the appeal in favor of the appellants, permitting Modvat credit for the duty paid on fabrics to be used for duty payable on made-ups, despite the absence of explicit rules governing such situations. The decision was based on the tribunal's interpretation of legal precedents and its assessment of the legislative framework, acknowledging the need to address gaps in the existing rules through judicial interpretation.