2004 (9) TMI 555 - AT - Central Excise

Summary

Issues:
- Appeal against Commissioner (Appeals) order regarding Modvat credit on asbestos yarn and texti-packing as inputs under Rule 57A of the Rules.

Analysis:
1. Issue: Appeal filed by Revenue against Commissioner (Appeals) order.

Analysis: The appeal was related to the denial of Modvat credit on asbestos yarn and texti-packing under the heading "capital goods." The Tribunal remanded the case back to the Commissioner (Appeals) to examine the items as inputs. The Commissioner (Appeals) allowed the credit on asbestos yarn and texti-packing as inputs under Rule 57A of the Rules.

2. Issue: Eligibility of asbestos/texti as inputs for Modvat credit.

Analysis: The Revenue argued that asbestos/texti were not used in the manufacture of final products but for wrapping pipe lines carrying gases. They contended that these items did not participate in or relate to the manufacture of the final product. On the other hand, the respondents argued that asbestos/texti were used to prevent pipe bursts when gases passed through at high pressure. They claimed that these items fell under the definition of inputs as they were used in or in relation to the manufacture of the final product. They cited legal precedents and the Tribunal's decision in Union Carbide India Ltd. v. CCE, Calcutta-I to support their argument.

3. Issue: Interpretation of "used in relation to the manufacture of final product."

Analysis: The Commissioner (Appeals) found that asbestos/texti were used for wrapping pipe lines during the manufacturing process, indirectly participating in the manufacturing process. It was determined that these items were used in relation to the manufacture of the final product based on the Tribunal's decision in Union Carbide India Ltd. case and other legal precedents cited by the respondents. Consequently, the appeal of the Revenue was rejected based on these findings.

In conclusion, the judgment upheld the Commissioner (Appeals) decision to allow Modvat credit on asbestos yarn and texti-packing as inputs under Rule 57A of the Rules, considering their indirect participation in the manufacturing process. The decision was supported by legal precedents and the interpretation of the items being used in relation to the manufacture of the final product.