2002 (12) TMI 183 - AT - Central Excise

Summary

Issues:
Whether HDPE bags used as inputs by the manufacturer of impregnated textile fabrics are eligible for Modvat credit under Rule 57A.

Analysis:
The judgment revolves around the eligibility of HDPE bags as inputs for Modvat credit. The appellants, manufacturers of impregnated textile fabrics, argued that the HDPE bags in question were directly produced from HDPE granules and not from woven fabrics. However, the order-in-original rejected this claim, stating that HDPE bags are usually produced from strips or tapes of HDPE and are not eligible for Modvat credit. The order-in-appeal upheld this decision. The appellants contended that there was no evidence supporting the claim that the HDPE bags were made from woven fabrics. They also cited a Tribunal decision to support their argument that HDPE bags do not fall under the exclusion in Rule 57A.

The learned Counsel for the appellants highlighted the lack of evidence in the show cause notice or findings to prove that the HDPE bags were made from woven fabrics. They argued that the statement by the adjudication Officer regarding the production of HDPE bags from strips or tapes was unsupported and based on personal observation. The appellants also referenced a previous Tribunal decision to strengthen their position that HDPE bags should not be excluded under Rule 57A. On the other hand, the learned SDR emphasized the absence of material evidence provided by the assessee to demonstrate that the HDPE bags were not made from woven fabrics.

Upon reviewing the records, it was found that there was no concrete evidence to support the claim that the HDPE bags were made from woven fabrics. The show cause notice and the original authority's findings lacked substantiating evidence for the assertion that HDPE bags are typically produced from tapes and strips of HDPE. The judgment highlighted that quasi-judicial authorities should not base their decisions solely on personal knowledge, as it cannot replace actual evidence. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellants, indicating that HDPE bags were eligible inputs for Modvat credit in this case.