2001 (8) TMI 254 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 57R(1) regarding denial of credit for capital goods used in the manufacture of exempted products.

Summary:
The appellant manufactured plastic crates using an injection moulding machine and took Modvat credit on duty paid on steel moulds. The appellant cleared some goods with duty payment and others without payment under an exemption. The issue arose when the authorities proposed recovery of credit taken on two moulds predominantly used for exempted goods. The appellant argued that Rule 57R(1) clearly allows credit unless capital goods are exclusively used for exempted products. The Commissioner (Appeals) believed the appellant had no intention to use goods for dutiable products, but the Tribunal found Rule 57R unambiguous, stating credit is disallowed only for exclusive use in exempted goods. The Tribunal emphasized the term "exclusively" in the rule, rejecting the need for other qualifiers like "predominantly." Citing a previous case, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the order denying credit.