2007 (3) TMI 642 - AT - Central Excise

Summary

Issues:
- Disallowance of Modvat credit on specific items used in the factory for the manufacture of final products.

Analysis:
1. The appeal was filed against the Order-in-Appeal disallowing Modvat credit on certain items used in the factory. The items in question included TOR Steel, steel tubes, S.S. welding pipe, Aqua control make lever operated bold valve, piston valve of cast steel, and M.P.I. micro cartridge. The appellant contended that these items were essential for producing finished products that were eventually duty paid.

2. The learned SDR supported the findings of the Commissioner (Appeals) by arguing that the mentioned items were not utilized in the manufacturing process of the final product. However, upon reviewing the submissions and records, it was observed that items 2 to 6, such as steel tubes, S.S. welding pipe, piston valve of cast steel, etc., were indeed used by the appellant in the production of the final product. Citing the precedent set by the Hon'ble Supreme Court in the case of Jawahar Mills Ltd., which allowed Modvat credit on similar items, the Tribunal concluded that the denial of Modvat credit on items 2 to 6 was unjustified and set it aside.

3. Concerning item No. 1, TOR steel, the Tribunal found that the appellant failed to provide a satisfactory explanation regarding its use in the manufacturing process of the final product. It was established that TOR steel was employed in RCC construction rather than the production of the final goods. Consequently, the Tribunal upheld the decision to deny Modvat credit on TOR steel, as the appellant was deemed ineligible for availing such credit on this particular item.

4. In conclusion, the appeal was partially allowed, with the Tribunal overturning the denial of Modvat credit on items 2 to 6 while upholding the decision to disallow such credit on TOR steel. The judgment was dictated and pronounced in the Open Court, providing a clear resolution to the issues raised in the appeal.