2005 (2) TMI 660 - AT - Central Excise

Summary

Issues:
Availability of Modvat credit on duty paid on Evaporation Boat during May 1992 to February 1994.

Analysis:
The appeal filed by M/s. Wilway Fort India Ltd. raised the issue of whether they were entitled to Modvat credit on the duty paid on Evaporation Boat during the specified period. The Appellant's representative argued that the Evaporation Boat is a consumable item, not a capital good, and therefore, the exclusion clause of Rule 57A of the Central Excise Rules, 1944 should not apply to them. They detailed the manufacturing process of metallised polyester film involving the use of the boat, emphasizing its role as an input essential for the process. The representative cited precedents such as Lohia Brass Pvt. Ltd. v. CCE, Meerut and CCE, Bhopal v. Bharat Zinc Ltd. to support their argument.

The Respondent's representative contended that the Modvat credit was disallowed by the Commissioner (Appeals) based on previous decisions like Jalpack Industries Ltd. v. CCE, Meerut and Madhya Pradesh Polypropylene Ltd. v. CCE, Indore.

Upon considering both parties' submissions, the judgment referred to Rule 57A of the Central Excise Rules, 1944, which allows credit of duty paid on inputs. However, the Explanation to Rule 57A excludes tools and appliances used in the manufacturing process from the definition of inputs. The Tribunal found that the evaporation boat was used as an appliance in the manufacturing process of metallised plastic films and, therefore, fell outside the definition of inputs during the relevant period. This interpretation was supported by the decision in Melton India Ltd. v. CCE, Meerut by the Larger Bench of the Tribunal. The judgment highlighted that the decisions cited by the Appellant's representative were delivered by a Single Member Bench, whereas the decision of the Larger Bench prevailed. Consequently, the appeal was rejected based on the Tribunal's interpretation of the law and precedents.

Overall, the judgment clarified the applicability of Modvat credit on the duty paid for Evaporation Boat during the specified period, emphasizing the exclusion of appliances from the definition of inputs under Rule 57A of the Central Excise Rules, 1944.