2002 (2) TMI 255 - AT - Central Excise

Summary

Issues Involved:
The issue involves the admissibility of Modvat credit on furnace oil used in the manufacture of wire rods cleared without payment of duty under Rule 57F(4) of the Central Excise Rules, 1944.

Details of the Judgment:

Issue 1: Admissibility of Modvat Credit
The appellants were issued a show cause notice alleging that they availed Modvat credit on furnace oil used in the manufacture of wire rods cleared without duty payment, violating Rules 57A, 57C, 57G, 57F, and 173Q of the Central Excise Rules, 1944. The Asstt. Commissioner confirmed a duty amount and imposed a penalty, which was upheld by the Commissioner (Appeals).

Issue 2: Appeal Against Impugned Order
The appeal against the Commissioner (Appeals) order was heard by the Appellate Tribunal. The appellants argued that since they clear a part of the final product on duty payment, the Modvat credit on fuel used in manufacturing the exempted products should not be denied under Rule 57C(1). They contended that the specific exceptions for fuel under Rule 57C(2) and Rule 57CC(1) exempt them from reversing Modvat credit.

Judgment
The Tribunal considered the specific provisions of the Modvat rules and concluded that no Modvat credit reversal is required for inputs used as fuel in the manufacture of final products cleared without duty payment. The Tribunal found that the rules create exceptions for fuel inputs, exempting them from credit reversal or payment of 8% of the price of exempted goods. Consequently, the impugned order was set aside, and the appeal was allowed.