2004 (12) TMI 237 - AT - Central Excise

Summary

Issues:
Grant of Modvat credit on original copies of invoices without prior permission. Grant of Modvat credit on a gear box used for removal of 'bagasse' within a sugar factory.

Analysis:
The appeal before the Appellate Tribunal CESTAT, CHENNAI pertained to the grant of Modvat credit to the respondents. The lower appellate authority had allowed Modvat credit to the extent of Rs. 1,79,076, out of which Rs. 1,31,165 was based on original copies of invoices and the remaining amount was related to a gear box used in a conveyor system for 'bagasse' removal within a sugar factory.

The Departmental Representative (DR) argued that the credit based on original invoices was in violation of the requirement of prior permission from the Assistant Commissioner, citing a precedent by the Tribunal's Larger Bench. On the other hand, the respondents' counsel contended that the gear box used for waste material removal was integral to the manufacturing process of sugar, thus justifying the credit.

Upon examination, the tribunal found merit in the appellant's case regarding the credit based on original invoices, emphasizing the necessity of prior permission for such credits as established in previous judgments. Consequently, the appeal was allowed in part concerning this issue.

Regarding the credit for the gear box, the tribunal upheld the decision of the lower appellate authority. It was noted that activities like waste removal within a factory could be considered part of the manufacturing process, drawing parallels to pollution control measures in other industries. Given the integral role of the gearbox in waste removal within the sugar factory, the tribunal found the respondents' argument valid and sustained the lower authority's decision on this aspect.

In conclusion, the appeal was partially allowed, with the tribunal ruling in favor of the appellant concerning the credit based on original invoices but upholding the lower authority's decision regarding the gear box credit.