2005 (11) TMI 129 - AT - Central Excise

Summary

Issues: Whether process losses in the transfer of liquid carbon dioxide gas should result in denial of Modvat credit.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai concerns the denial of Modvat credit by the revenue based on process losses of liquid carbon dioxide gas during transfer to cylinders. The Tribunal referred to previous decisions to address the issue. In the case of HPCL v. Commissioner of Central Excise, Calcutta-I, it was held that wastage attributable to various factors is covered by Rule 57D of the Central Excise Rules, and Modvat credit cannot be denied. Additionally, the Tribunal cited the case of Commissioner of Central Excise, Delhi-III v. I.P.F. Vikram India Ltd., where it was established that certain processes amount to manufacture, and credit on inputs wasted during such processes is not deniable.

The Commissioner relied on Circular No. 267/136/87-CX. 8, highlighting losses during storage, pressure changes, filling cylinders, and other operational stages. These losses were deemed as process losses inherent in the manufacturing process. The Tribunal agreed with the Commissioner's reasoning, emphasizing the peculiar nature of the commodity and the unavoidable losses during manufacturing. Consequently, the Tribunal rejected the revenue's appeal, affirming that Modvat credit should not be denied for the quantity of losses incurred during the manufacturing process.