1988 (2) TMI 283 - AT - Central Excise

Summary

Issues:
1. Recovery of MODVAT credit irregularly availed under Rule 57(1) of the Central Excise Rules, 1944.
2. Eligibility of MODVAT credit on Ramming mass, MS Scrap, and Duplex Moulds.
3. Quantification of duty demanded and recovery orders.
4. Interpretation of Rule 57A regarding inputs eligible for MODVAT credit.
5. Compliance with Rule 57G for availing MODVAT credit.
6. Application of deemed credit procedure for MS Scrap.
7. Factual findings on the nature of scrap received by the appellants.

Analysis:
The judgment by the Appellate Tribunal CEGAT, Madras involved two appeals against the Collector of Central Excise's orders for the recovery of MODVAT credit irregularly availed by the appellants. The issues primarily revolved around the eligibility of MODVAT credit on Ramming mass, MS Scrap, and Duplex Moulds, along with the quantification of duty demanded and compliance with relevant rules.

The learned Consultant for the appellants argued that Ramming mass, although not a raw material, is used in the manufacturing process and should be eligible for MODVAT credit. Similarly, Duplex Moulds were claimed to be covered under the wider explanation of Rule 57A. Regarding MS Scrap, the appellants relied on the Government's order for deemed credit procedure, asserting that the date of declaration should not affect MODVAT eligibility.

On the other hand, the learned S.D.R. contended that Duplex Moulds and Ramming mass did not qualify for MODVAT credit as per Rule 57A, and emphasized the mandatory requirement of obtaining acknowledgement under Rule 57G for availing credit.

The Tribunal analyzed the submissions and ruled that Ramming mass and Duplex Moulds could be considered inputs eligible for MODVAT credit under Rule 57A, as they were integral to the manufacturing process. However, it emphasized the necessity of complying with Rule 57G, which mandates obtaining acknowledgement for availing credit from the Assistant Collector.

Regarding MS Scrap, the Tribunal clarified that the deemed credit order only applied to manufacturers who had complied with Rule 57G. It upheld the Collector's findings on the nature of scrap received by the appellants, stating that the material's non-duty paid status made it ineligible for deemed credit.

Ultimately, the Tribunal upheld the Collector's order but directed a re-determination of the amount to be recovered, noting potential errors in the quantification of duty for Ramming mass and MS Scrap. The appeals were disposed of accordingly.