2003 (10) TMI 185 - AT - Central Excise

Summary

Issues:
1. Denial of exemption on waste products due to availing Modvat credit.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai dealt with the issue of denial of exemption on waste products by a manufacturing company engaged in the production of Poly Coated Paper and Paperboard, subject to central excise duty under Chapter Heading 48, who had availed Modvat credit for inputs. The primary question raised was the eligibility of waste products for exemption under Notification Nos. 38/90 and 14/92 despite the utilization of Modvat credit. The Tribunal examined Rule 57D of Modvat Rules, which explicitly states that credit on specified goods in relation to inputs shall not be denied due to the presence of those inputs in waste arising during manufacturing, even if the waste is exempt from excise duty or not specified as a final product.

The appellants contended that the mere availing of Modvat credit should not be a basis for denying the exemption on waste products. They cited various decisions of the Tribunal in support of their argument, emphasizing that eligibility for exemption should not be impacted by the utilization of Modvat credit on inputs. The Tribunal noted that Rule 57D safeguards the credit taken against loss or waste of inputs and reiterated that the eligibility for exemption under Notification No. 14/92 remains unaffected by the availing of Modvat credit, as established in previous case law.

Ultimately, the Tribunal found that the denial of the benefit of the notification solely on the grounds of availing Modvat credit was unjustifiable. Citing the case law provided by the appellants and the clear provisions of Rule 57D, the Tribunal set aside the impugned orders and allowed the appeals. The judgment concluded by granting the appellants the entitlement to any consequential relief resulting from the decision.

In summary, the judgment clarified that the availing of Modvat credit on inputs should not preclude a manufacturing company from claiming exemption on waste products, as long as the provisions of Rule 57D are adhered to. The Tribunal emphasized the importance of upholding the eligibility for exemption irrespective of the utilization of Modvat credit, as supported by legal precedents and statutory regulations.