2006 (6) TMI 340 - AT - Central Excise

Summary

Issues:
1. Denial of credit under Rule 57G of Central Excise Rules for inputs received before filing declaration.
2. Denial of credit under Rule 57H of Central Excise Rules for inputs lost during the manufacturing process.

Analysis:

Issue 1: Denial of credit under Rule 57G
The appellant appealed against the Order-in-Appeal denying credit for inputs received before filing the necessary declaration under Rule 57G of Central Excise Rules. The appellant contended that they filed the declaration for availing credit on 4-3-94, and relied on the amendment to Rule 57G by Notification No. 7/99-C.E., dt. 9-2-99. The appellant cited the decision of the Larger Bench in the case of Kamakhya Steels (P) Ltd. v. CCE, Meerut, where it was held that credit can be availed even without filing a declaration. The Tribunal, considering the amendment and the decision of the Larger Bench, allowed the benefit of credit where no declaration was filed. The appellant's argument was accepted, and the denial of credit under Rule 57G was set aside.

Issue 2: Denial of credit under Rule 57H
Regarding the denial of credit under Rule 57H for inputs lost during the manufacturing process, the revenue argued that credit is only available for inputs actually used in the manufacture of finished goods. They disputed the appellant's calculation of the quantum of inputs lost in the process. However, the Tribunal interpreted Rule 57H, stating that a manufacturer can take credit on inputs lying in stock and those used in the manufacture of final products cleared after 1-3-94. The Tribunal found merit in the appellant's contention that credit cannot be denied for inputs lost during the manufacturing process. Consequently, the denial of credit under Rule 57H was set aside, and the appeal was allowed. The appellants were entitled to consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, allowing the credit under Rule 57G and Rule 57H. The judgment provided a detailed analysis of the relevant rules, amendments, and precedents to support the decisions made.