2004 (12) TMI 698 - AT - Central Excise

Summary

Issues involved:
Entitlement to Modvat Credit for LDO and FO used as fuel in the manufacture of Silver and Sulphuric Acid cleared at nil rate of duty.

Analysis:
1. Appellant's Argument: The appellant argued that Modvat credit should be available for LDO and FO even when cleared at nil rate of duty, citing the Tribunal judgment in Commissioner of Central Excise v. Sudarsanam Spinning Mills and other related rulings. The appellant contended that these judgments support the availability of Modvat credit in such cases.

2. Revenue's Argument: The Revenue contended that Rule 57C(1) clearly states that Modvat credit is not applicable to goods cleared without payment of duty. The Revenue sought a review of the order, referencing the Larger Bench's decision in Kirloskar Oil Engines Ltd. v. CCE, Pune, which denied Modvat credit for inputs used in final products cleared at nil rate of duty.

3. Judicial Analysis: The Tribunal analyzed the applicability of Rule 57C(1) and the interpretations of related rules. The Tribunal distinguished the case from Kirloskar Oil Engines Ltd., stating that the issue in question pertained to Modvat credit for fuels, covered under different legal provisions. The Tribunal referenced the judgment in CCE, Tirunelveli v. Sudarsanam Spinning Mills, which addressed the availment of Modvat credit for inputs used in manufacturing both dutiable and exempted goods.

4. Precedent and Decision: The Tribunal highlighted the findings in CCE, Tirunelveli v. Sudarsanam Spinning Mills, emphasizing the interpretation of Rule 6 of CENVAT Credit Rules, 2002, regarding the eligibility for Modvat credit on inputs used as fuel. The Tribunal upheld the appellant's argument, following the precedent set in previous cases and setting aside the impugned order, granting consequential relief if necessary.

In conclusion, the judgment clarified the entitlement to Modvat credit for LDO and FO used as fuel in the manufacture of goods cleared at nil rate of duty, based on a thorough analysis of relevant legal provisions and precedents. The decision aligned with previous rulings and upheld the appellant's right to claim Modvat credit in the given circumstances.