2007 (2) TMI 527 - AT - Central Excise

Summary

Issues involved: Appeal against order passed by Commissioner (Appeals) regarding duty on inputs under Modvat scheme.

Issue 1: Whether the duty paid on inputs removed for manufacturing process under Modvat scheme is liable to be reversed.

The respondents, engaged in manufacturing steel tubes and pipes under Modvat scheme, availed credit for duty paid on HR sheets used as inputs. The Revenue contended that certain sheets, not meeting required width, were cleared as slits, demanding duty equal to Modvat credit taken on HR sheets. The Commissioner (Appeals) allowed the appeals, stating that all production issued for manufacturing final product, including slits not meeting required sizes, were cleared on payment of duty. Revenue argued that slitting does not amount to manufacture, requiring reversal of credit for cleared slits.

Decision: The Tribunal found that the duty paid sheets were used in the manufacturing process, slit as per required sizes for pipes, with only certain slits not meeting size requirements cleared on payment of duty. It was held that the inputs were not cleared as such, as they were used in the manufacturing process. Therefore, the appeals filed by the Revenue were dismissed.