2002 (5) TMI 180 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit on inputs used for manufacturing bus-bar.
2. Interpretation of Rule 57D(2) of Central Excise Rules.
3. Applicability of Notification No. 67/95-CE on Modvat credit.

Analysis:

Issue 1: Admissibility of Modvat credit on inputs used for manufacturing bus-bar:
The case involved a dispute regarding the admissibility of Modvat credit on inputs used for manufacturing bus-bar, which was exempted from duty. The authorities alleged that Modvat credit on inputs for bus-bar was inadmissible as per Rule 57C. The appellants argued that bus-bar was an intermediate product used in the manufacture of dutiable final products, namely aluminum and its derivatives. They cited relevant case law to support their contention. The learned Counsel for the appellant emphasized that the inputs used in the intermediate product bus-bar were integral to the manufacture of the final dutiable products, making the Modvat credit admissible.

Issue 2: Interpretation of Rule 57D(2) of Central Excise Rules:
The dispute also centered around the interpretation of Rule 57D(2) of the Central Excise Rules. The appellant contended that bus-bar met the criteria of an intermediate product as specified under Rule 57D(2), allowing for the admissibility of Modvat credit on inputs used in its manufacture. They supported their argument by referring to various decisions that highlighted the concept of intermediate products and captive consumption. The learned Counsel asserted that the amendments to Rule 57D w.e.f. 18-5-1995 did not dispute the admissibility of credit, further strengthening the appellant's position.

Issue 3: Applicability of Notification No. 67/95-CE on Modvat credit:
Another aspect of the case involved the applicability of Notification No. 67/95-CE on the Modvat credit related to the inputs used in manufacturing bus-bar. The authorities argued that since bus-bar was exempted, the provisions of Rule 57C applied, making the Modvat credit on inputs for bus-bar inadmissible. The learned DR contended that without a declaration of bus-bar as an intermediate product, the benefit under Rule 57D(2) could not be granted. The authorities sought to reject the appeal based on the balance of credit as on 16-3-1995 and the subsequent period up to 18-5-1995.

In the final judgment, the Tribunal carefully considered the submissions from both sides, analyzed the evidence on record, and reviewed relevant case law. The Tribunal noted that the appellant had clearly indicated the use of bus-bar for manufacturing aluminum and its derivatives, establishing it as an intermediate product. By referencing previous decisions and the concept of captive consumption, the Tribunal concluded that bus-bar qualified as an intermediate product eligible for the benefit of Modvat credit under Rule 57D(2) of the Central Excise Rules. Therefore, the appeal was allowed, and any consequential relief was deemed admissible in accordance with the law.