2007 (8) TMI 548 - AT - Central Excise

Summary

Issues:
Admissibility of Cenvat credit for a product containing less than the prescribed quantity for Central Excise duty.

Analysis:
The appellate tribunal considered the case where the department contended that Cenvat credit of Rs. 2,16,174/- was not admissible to the manufacturers due to the product containing less than 135 mg of Dextropropoxyphene - HCl, falling below the required minimum quantity specified in a government notification. The product was not liable for Central Excise duty but for State Excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955. Consequently, the manufacturers were deemed ineligible for credit as no Central Excise duty was payable on the product.

Upon hearing both parties, it was noted that the Revenue had filed an appeal after an interim order from the High Court restrained the assessee from claiming modvat benefit during the pendency of a related Writ Petition by another manufacturer. However, the High Court ultimately ruled in Writ Petition No. 2348 of 1999 by USV Limited, stating that a product containing a dosage unit of 70 mg of Dextropropoxyphene - HCl, below the prescribed 135 mg, would be subject to Central Excise duty and eligible for Modvat/Cenvat credit, exempt from State Excise duty under the relevant Act.

The tribunal found the product in question in the present case to be similar to the one considered by the High Court in the USV Limited decision. Following the High Court's ruling, the tribunal upheld the impugned order, determining that the manufacturers were indeed entitled to credit. Consequently, the appeal by the Revenue was dismissed, affirming the eligibility of the respondents for the Cenvat credit.