2005 (3) TMI 355 - AT - Central Excise

Summary

Issues:
1. Action required regarding credits taken on inputs used in the production of captively consumed castings.
2. Interpretation of Rule 57CC in relation to the value of final products.

Analysis:

1. The appellants manufactured Castings and took Modvat credit on the inputs received for that purpose. A portion of the Castings produced was captively used, and the rest were sold in the market. The question arose regarding the treatment of credits taken on inputs used in the production of captively consumed castings. The appellant was paying duty at the rate of 8% of the value of the Castings as per Rule 57CC. The impugned order directed the reversal of 8% of the value of the PD Pumps, as the Castings were used in manufacturing PD Pumps. However, it was argued that the final product was the Casting, not the PD Pumps. The Tribunal referred to a previous decision and held that the demand was not sustainable. The appeals were allowed, and consequential relief, if any, was granted to the appellant.

2. The Tribunal noted that payment at the rate of 8% under Rule 57CC pertained to the value of the final product manufactured using the input. In this case, the final product was the Casting, not the PD Pumps made from the Castings. Therefore, based on this fundamental principle and the precedent set by a prior Tribunal decision, the demand was deemed unsustainable. Consequently, the appeals were allowed, and any necessary relief was provided to the appellant. The order was directed to be given by "DASTI."

This judgment clarifies the treatment of credits on inputs used in the production of captively consumed castings and interprets Rule 57CC in determining the duty payable based on the value of the final product. The decision emphasizes the importance of aligning duty payments with the actual final product manufactured using the inputs in question.