2002 (3) TMI 176 - AT - Central Excise

Summary

Issues:
- Duty demand on Modvat credit for bulk detergent powder waste during re-packing process
- Admissibility of Modvat credit on inputs
- Manufacturing process involved in re-packing bulk detergent powder
- Time-barred show cause notice and suppression of material facts

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Original dropping the demand of Rs. 23,21,245.09 against the respondent, engaged in detergent manufacturing and re-packing bulk powder under brand names. The issue revolved around Modvat credit claimed on inputs wasted during re-packing process.

2. The respondents argued that bulk powder could be considered a semi-finished product, becoming finished upon re-packing, contrary to the show cause notice claiming no manufacturing process. They cited a Trade Notice and argued against time-barred notice and suppression of facts.

3. The Commissioner accepted the respondents' version, dropping the duty demand, leading to the Revenue's appeal. The Revenue contended that Modvat credit was inadmissible on wasted bulk powder, as only the final product qualified for credit due to lack of manufacturing process in re-packing.

4. The dispute centered on whether the re-packing process constituted manufacturing under Rule 57D, affecting Modvat credit eligibility. The Commissioner's order was supported by CBEC's circular, Allahabad High Court's judgment, and Tribunal's precedent emphasizing the use of duty-paid inputs in the final product.

5. The Tribunal found that the re-packing process amounted to manufacturing under Excise law, affirming the Commissioner's decision to drop the duty demand based on Rule 57D provisions and legal precedents. The Revenue's appeal was dismissed for lacking merit.

6. The judgment highlighted the importance of considering the manufacturing process and utilization of duty-paid inputs in determining Modvat credit eligibility, ultimately upholding the Commissioner's decision and dismissing the Revenue's appeal.