2004 (12) TMI 219 - AT - Central Excise

Summary

Issues: Denial of Modvat credit on capital goods manufactured from duty paid inputs for final product manufacture.

In this appeal before the Appellate Tribunal CESTAT, New Delhi, the primary issue revolves around the denial of Modvat credit to the respondents concerning capital goods produced from duty paid inputs and subsequently used in the production of the final product. The learned Commissioner (Appeals) allowed the credit by invoking Rule 57D of the Rules in the impugned order.

The Revenue, however, attempted to negate the credit by arguing that the inputs were used in manufacturing capital goods exempt from duty payment. The Tribunal disagreed with this contention, citing Rule 57D, which explicitly protects the credit under certain circumstances. Rule 57D states that the credit of specified duty shall not be denied if inputs are used in manufacturing capital goods that are not subject to excise duty. The Tribunal emphasized that the language of the rule is unambiguous, and the Commissioner (Appeals) correctly applied it.

The Tribunal further clarified that since the capital goods were used by the respondents in manufacturing dutiable final products, the credit on inputs utilized for capital goods production is permissible. Consequently, the impugned order was deemed lawful, and the Revenue's appeal was dismissed. The decision upholds the availability of credit on inputs used for capital goods that are subsequently employed in the manufacturing of dutiable goods.