2003 (11) TMI 197 - AT - Central Excise

Summary

Issues:
Whether Modvat credit is to be disallowed in respect of gases lost during production.

Analysis:
The appeal was filed by the Revenue questioning the allowance of Modvat credit in respect of gases lost during production. The respondents did not appear during the hearing, and the Departmental Representative presented the case. The Revenue argued that M/s. BOC Ltd. was debiting gases lost during production in their records, leading to the disallowance of Modvat credit by the Assistant Commissioner. However, the Commissioner (Appeals) allowed the appeal, stating that the loss of gases during the manufacturing process is inevitable and should be considered as used in the manufacture of final products. The Departmental Representative cited a previous Tribunal decision and a reference application filed in the High Court on a similar issue. The Tribunal found that the loss of Nitrogen/Argon gas during production indicated its use in the manufacturing process, agreeing with the Commissioner (Appeals) and rejecting the Revenue's appeal. The Tribunal distinguished a previous case involving Oxygen gas loss, where remission of duty was not allowed for the quantity lost.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) to allow Modvat credit for gases lost during production. The Tribunal emphasized that the loss of gases during the manufacturing process does not negate their usage in the final products. The Tribunal also noted the absence of any stay on the previous decision favoring the respondents and rejected the Revenue's appeal based on the specific circumstances of the case. The Tribunal differentiated the current case from a previous case involving Oxygen gas loss, where remission of duty was not permitted for the lost quantity.