2004 (11) TMI 436 - AT - Central Excise

Summary

Issues involved: Availability of Modvat credit to a company in respect of DMT used in the manufacture of man-made yarn.

Analysis:
The Appellate Tribunal CESTAT, New Delhi, addressed the issue of whether Modvat credit is available to a company, M/s. Shree Synthetics Ltd., for DMT used in the production of man-made yarn. In the absence of representation from the respondents, the Tribunal proceeded with the hearing. The Senior Departmental Representative argued that since man-made yarn was not specified as a final product eligible for Modvat credit, the company could not claim credit for the duty paid on DMT. Additionally, it was contended that man-made yarn is not waste, refuse, or a by-product, but the final product itself. However, upon examination of the records, it was noted that DMT was utilized by the company to manufacture Methanol, which was then used in the production of man-made yarn. The Tribunal observed that Methanol is a specific product listed in the Notification under Rule 57A of the Central Excise Rules. Despite the company using Methanol in the same factory for making man-made yarn, it did not disqualify them from claiming Modvat credit for the duty paid on DMT, which was used in the production of Methanol, cleared after paying duty. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it.