2000 (5) TMI 64 - AT - Central Excise

Summary

Issues Involved:
1. Admissibility of Modvat credit on lubricating oils and greases u/r 57A of the Central Excise Rules prior to 1-3-1997.
2. Whether lubricants used for lubrication of machinery qualify as 'inputs' u/r 57A.
3. Validity of Modvat credit taken on the strength of the original copy of the invoice without satisfying the jurisdictional Assistant Commissioner about the loss of the duplicate copy.
4. Admissibility of Modvat credit on lubricants declared as capital goods u/r 57Q instead of as inputs u/r 57A.

Summary:

1. Admissibility of Modvat credit on lubricating oils and greases u/r 57A of the Central Excise Rules prior to 1-3-1997:
The Tribunal examined whether Modvat credit was admissible on lubricating oils and greases u/r 57A during the period prior to 1-3-1997. The periods of dispute in the appeals ranged from July 1995 to March 1997. The Tribunal noted conflicting decisions on this issue, necessitating a reference to a larger bench.

2. Whether lubricants used for lubrication of machinery qualify as 'inputs' u/r 57A:
The Tribunal considered the definition of 'input' u/r 57A, which includes goods used in or in relation to the manufacture of final products, whether directly or indirectly. The Tribunal held that lubricating oils and greases used for lubricating machinery essential for the manufacturing process qualify as 'inputs'. This conclusion was supported by previous decisions in Pragati Paper Mills, Sipta Coated Steel Ltd., and Black Diamond Beverages Ltd., and was consistent with the Supreme Court's interpretation in J.K. Cotton Spg. & Wvg. Mills Co. Ltd. and Indian Farmers Fertiliser Coop. Ltd.

3. Validity of Modvat credit taken on the strength of the original copy of the invoice without satisfying the jurisdictional Assistant Commissioner about the loss of the duplicate copy:
In appeal No. E/1579/97, the Tribunal found that Modvat credit taken on the original copy of the invoice without satisfying the jurisdictional Assistant Commissioner about the loss of the duplicate copy was not admissible. This decision was based on the precedent set by the Tribunal's Larger Bench in C.C.E., New Delhi v. Avis Electronics Pvt. Ltd.

4. Admissibility of Modvat credit on lubricants declared as capital goods u/r 57Q instead of as inputs u/r 57A:
In appeal No. E/1814/97-NB, the Tribunal addressed whether Modvat credit on lubricants could be allowed when declared as capital goods u/r 57Q instead of as inputs u/r 57A. The Tribunal followed the decision in Devyani Beverages Ltd. v. CCE, Meerut, holding that the declaration filed in terms of Rule 57Q was sufficient for extending credit on inputs within the meaning of Rule 57A.

Conclusion:
The Tribunal held that lubricants used for lubrication of machinery employed for the manufacture of finished products are 'inputs' u/r 57A and are eligible for Modvat credit. The appeals filed by the Department were rejected, and the appeal challenging the denial of Modvat credit based on the declaration under Rule 57Q was allowed.