2006 (12) TMI 58 - AT - Central Excise

Cenvat/Modvat Two cases alleged (i) Whether calibration oil is eligible input for credit and (ii) credit taken within 9months from the date of BOE admissible or not - Held (i) yes (ii) yes

Summary

Issues:
1. Admissibility of credit on inputs taken beyond the period of six months from the date of valid duty paying documents.
2. Whether calibration oil is considered an input in the manufacture of the final product.

Analysis:
1. The first issue revolves around the admissibility of credit on inputs taken beyond the stipulated period of six months from the date of valid duty paying documents. The Revenue contended that credit is not admissible under Rule 57G(2) read with Notification No. 39/96 if taken beyond the specified period. However, it was argued that the inputs were sent directly to a job worker after import, and thus, the credit could be taken within nine months from the date of the duty paying documents. The Tribunal upheld the Commissioner's order, stating that the factual position indicated the inputs were indeed sent directly to the job worker, making the nine-month provision applicable in this case.

2. The second issue concerns whether calibration oil qualifies as an input in the manufacture of the final product. Referring to a previous case and a judgment by the Hon'ble Bombay High Court, it was established that calibration oil is considered an input used in or in relation to the manufacture of the final product. The Tribunal dismissed the Revenue's challenge on this ground, citing precedents and affirming that calibration oil meets the criteria of being an input in the manufacturing process.

In conclusion, the Tribunal upheld the order of the Commissioner of Central Excise (Appeals) regarding the admissibility of credit to the respondent, thereby rejecting the appeal made by the Revenue. The decision was based on the interpretation of relevant rules and precedents, affirming that the credit on inputs taken within nine months from the duty paying documents was permissible, and that calibration oil qualifies as an input in the manufacturing process.