2005 (3) TMI 191 - AT - Central Excise

Summary

Issues: Modvat credit on cylinders used for filling nitrogen gas.

Analysis:
The case involved the appellants, who were manufacturing and clearing hydrogen and nitrogen gases. The dispute arose when the appellants claimed that they were including the value of the cylinders in the assessable value of the gas. A show cause notice was issued to them, stating that the cylinders are of returnable nature and their cost should not be included in the assessable value of the final products. The Modvat credit of Rs. 4,76,560/- for the period from 4-8-1999 to 29-11-1999 was proposed to be recovered. The Appellate Authority allowed the Modvat credit of Rs. 4,02,560/- on hydrogen gases but disallowed Rs. 74,000/- taken on cylinders used for filling nitrogen gases as the appellants failed to prove that the cost of nitrogen gas cylinder was included in the cost of nitrogen gas.

During the de novo proceedings, the Commissioner (Appeals) upheld the decision to disallow the credit on cylinders for nitrogen gas, as the appellants could not substantiate their claim. The Revenue, represented by Shri P.M. Rao, argued that Modvat credit is admissible only when the cost of the cylinders is included in the assessable value of the gas. As the appellants failed to provide evidence that the value of cylinders was added to the assessable value of nitrogen gas, the credit was rightfully denied by the lower authorities. Shri Rao relied on a previous Tribunal decision in the case of Black Diamond Beverages Ltd. v. CCE, Calcutta-I - 1998 (103) E.L.T. 340 to support his argument.

After considering the appeal petition and the submissions made by Shri Rao, the Member (T) found that there was no evidence to support the appellants' claim that the value of cylinders was included in the assessable value of the nitrogen gas. Consequently, the credit was rightly denied by the lower authorities. Therefore, the appeal was deemed to lack merit and was rejected accordingly.