2004 (8) TMI 302 - AT - Central Excise

Cenvat/Modvat - premature appeals against a certificate restricting credit - whether non-duty paid finished products can be sent for job work under Rule 57F(4) - HELD THAT - The demand of duty merely on the ground that rubber adhesives is a fully finished product or that some part of it is also sold or cleared by the appellants on payment of duty, has been held to be not sustainable in the light of Rule 57F(4) of Central Excise Rules. The Tribunal in the case of CCE v. Flex Lamination 1998 (5) TMI 418 - ITAT NEW DELHI has also held that Gravure printing cylinders captively used by assessee for printing laminated plastic film are intermediate product. It has been held that same product may be final product in respect of particular goods but may be intermediate goods in respect of other goods. Therefore, it upheld the assessee's contention that Modvat credit taken on the inputs used in the manufacture of G.P. Cylinders will be admissible in terms of Rule 57D(2) of Central Excise Rules, 1944. In the case of M. Tex Another v. CCE, 2000 (1) TMI 128 - CEGAT, NEW DELHI the processed fabrics were received by job worker for heat setting and stentering under Rule 57F(4) and returned after processing. It was held that although it is final goods, yet it is eligible for the benefit of Rule 57F(4) of Central Excise Rules and job worker is not liable to pay duty on processed fabrics. In this regard the Tribunal referred to several judgments and distinguished the same. However, it applied the ratio of the Motor Industries Co. Ltd. v. CCE, 1998 (10) TMI 243 - CEGAT, MUMBAI . The Tribunal in the case of CCE v. Tirupati Fabrics Industries Ltd. 2001 (7) TMI 1324 - CEGAT, NEW DELHI noted that the respondent received fabrics for processing on job work basis under Rule 57F(4) and used their own certain modvatable inputs such as dyes and chemicals in processing. It was held that respondents paid duty on job work charges only and not on assessable value inclusive of cost of unprocessed fabrics under Sec. 4 of CEA, 1944. The Tribunal noted that duty short paid is payable by supplier of fabrics and not by job worker in terms of Rule 57F(4) and rejected the appeal. In conclusion, the Tribunal found in favor of the appellants, allowing them to clear carbon electrodes for job work under Rule 57F(4) as intermediate products for batteries. The appeals E/58, 59 60/04 were allowed based on the applicable judgments and the nature of the products involved.

Summary

Issues Involved:
The judgment involves the issue of premature appeals against a certificate restricting credit, and the issue of whether non-duty paid finished products can be sent for job work under Rule 57F(4) of Central Excise Rules.

Premature Appeals Issue:
The appeals E/35 & 36/2002 were dismissed as inconsequential by the Commissioner as they were premature, being filed against a certificate restricting credit to 95% of duty paid.

Non-Duty Paid Finished Product Issue:
Appeals E/58, 59 & 60/2002 questioned whether carbon electrodes, a non-duty paid finished product, could be sent for job work under Rule 57F(4). The Deputy Commissioner held they couldn't as they were not duty paid inputs. The appellants argued that the carbon electrodes were sent under Rule 57F(4) with proper procedures and declarations, and were intermediate products for batteries.

The appellants contended that the Modvat scheme aims to prevent duty cascading and ensure duty paid at various stages is available as credit. They argued that sending carbon electrodes for job work under Rule 57F(4) does not provide a revenue gain, but fulfills the scheme's purpose.

The Tribunal considered various judgments, including CCE v. Gajra Gears Ltd., Tega India Ltd. v. CCE, and others, which supported the appellants' position. They held that if inputs are sent for further processing and then used in the final product, Rule 57F(4) benefit applies.

In conclusion, the Tribunal found in favor of the appellants, allowing them to clear carbon electrodes for job work under Rule 57F(4) as intermediate products for batteries. The appeals E/58, 59 & 60/04 were allowed based on the applicable judgments and the nature of the products involved.