2000 (10) TMI 84 - AT - Central Excise

Summary

Issues:
1. Appeal against dropping proceedings for payment of Central Excise duty or reversing Modvat credit on cement.
2. Whether concrete cubes manufactured along with sleepers are excisable goods.
3. Liability to pay duty on concrete cubes or reverse Modvat credit.
4. Applicability of Rule 57D of Central Excise Rules on Modvat credit denial.
5. Marketability and manufacturing tests for levy of excise duty.
6. Claiming Modvat credit on inputs used in manufacturing dutiable goods.

Analysis:
1. The appeal was filed by the Revenue against dropping proceedings for payment of Central Excise duty or reversing Modvat credit on cement, challenging the impugned order passed by the Commissioner (Appeals) confirming the order-in-original.
2. The respondents manufactured concrete sleepers and availed Modvat credit on inputs. Show cause notices were issued for non-payment of duty on cement cubes used in manufacturing sleepers. The Assistant Commissioner dropped proceedings, which was upheld by the Commissioner (Appeals).
3. The Revenue contended that concrete cubes are excisable goods and duty should be paid. Alternatively, they argued for reversing Modvat credit if cubes are not marketable. Respondents argued that cubes are not marketable, hence not dutiable, and Modvat credit cannot be denied under Rule 57D.
4. The Tribunal found that while cubes were manufactured, they lacked marketability, making them non-excisable. However, the respondents were obligated to reverse Modvat credit on inputs used for cubes as they were not dutiable goods.
5. The Tribunal clarified that Rule 57D does not apply as cubes were distinct goods from sleepers, used for strength testing. The expenditure on cubes was included in sleeper prices, justifying denial of Modvat credit.
6. Citing Chandrapur Magnet Wires case, the Tribunal held that Modvat credit can only be claimed on inputs used for dutiable goods, not non-dutiable ones. Thus, the respondents were directed to reverse the Modvat credit on inputs used for manufacturing concrete cubes, overturning the Commissioner (Appeals) order.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal interpretations, and the final decision reached by the Tribunal.