2003 (9) TMI 662 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57J and its relationship with Rule 57A under the Modvat scheme.

Analysis:
The appeal challenged the Order-in-Appeal restricting Modvat credit to 95% under Notification No. 14/98-CE (NT) for goods notified under Rule 57A and 57J. The appellants argued that Rule 57J, with a non obstante clause, should prevail independently over Rule 57A. They cited a judgment supporting the precedence of non obstante clauses. The Revenue contended that Rule 57A allows credit for inputs used in final products, while Rule 57J permits credit for intermediate products, added later to facilitate Modvat credit on intermediates. They highlighted the restriction to 95% credit under Notification No. 14/98, applicable during the appellants' claim period. The appellants insisted on 100% credit under Rule 57J, emphasizing its independence and the manufacturing process involving intermediate products contributing to final goods.

The Tribunal analyzed the conflicting arguments, noting the amendment of Notification No. 5/94 to 95% credit under Notification No. 14/98, effective during the appellants' claim period. The Tribunal rejected the appellants' claim for 100% credit, stating that both Rule 57A and Rule 57J are part of the Modvat scheme, with Rule 57A serving as the foundational provision. It acknowledged Rule 57J's insertion to allow credit for intermediate products, not covered by Rule 57A. The Tribunal upheld the 95% credit restriction, considering the prevailing law and the specific provisions of Rule 57J. Ultimately, the Tribunal affirmed the Commissioner's decision, denying the appellants' request for 100% Modvat credit and maintaining the 95% restriction under Notification No. 14/98.