2007 (3) TMI 442 - AT - Central Excise

Summary

Issues involved: Determination of Modvat credit eligibility based on losses in the process of manufacture of compressed gas.

Summary:

The Appellate Tribunal CESTAT, KOLKATA, in the case, addressed the issue of Modvat credit eligibility concerning losses in the manufacture of compressed gas. The Original Authority had ruled that losses in the process did not justify denial of credit, leading to the dropping of related show cause notices. However, the Lower Appellate Authority considered losses in specific months and concluded that credit should be denied beyond the normal percentage of loss. The case involved the receipt of Oxygen and Nitrogen gas for manufacturing compressed gas, with the appellants claiming duty credit on the gases received. It was noted that the percentage of loss during production could vary, and there was no evidence of gas sale or transfer by the appellants. The Tribunal opined that duty credit should not be affected by efficiency fluctuations in gas use for a particular month, as long as there was no unauthorized removal from the factory. Normal manufacturing losses were deemed acceptable, and the duty credit could not be withheld. Consequently, the impugned order was set aside, and the Original Authority's decision was reinstated, resulting in the allowance of the Appeal.

(Separate Judgment by Dr. Chittaranjan Satapathy, Shri D.N. Panda, JJ.)