1988 (8) TMI 236 - AT - Central Excise

Summary

Issues:
1. Stay application dismissal regarding MODVAT credit entitlement.
2. Appeal against Collector of Appeals' order on MODVAT credit eligibility for captively consumed inputs.

Issue 1:
The stay application was filed to halt the Collector of Central Excise (Appeals), Madras' order granting MODVAT credit on intermediate products manufactured by the respondents. The application was dismissed since the appeal's issue was concise and set for prompt disposal.

Issue 2:
The appeal (E/318/88/MAS) by the Collector of Central Excise, Belgaum, contested the Collector of Appeals' decision allowing MODVAT credit for captively consumed inputs by the respondents. The respondents, engaged in Aluminium manufacturing, declared Cryolite and Soderburg paste as inputs for Calcined Alumina production. They paid duty on these captively used inputs and availed MODVAT credit. An amendment specifying captively produced inputs as eligible for MODVAT credit led to a Show Cause Notice and demand confirmation by the Assistant Collector. The Collector (Appeals) overturned the Assistant Collector's order, prompting the appeal.

The appellant's representative argued that the pre-amendment Rule 57A did not include captively manufactured and consumed goods as MODVAT credit eligible inputs. The amendment through Notification No. 197/86 broadened the scope to cover such inputs, making the Collector (Appeals) decision erroneous and advocating restoration of the Assistant Collector's order.

The respondent's counsel contended that the declared inputs were accepted by the Department, duty paid, and covered under the MODVAT credit eligible inputs notification. They supported the Collector (Appeals) rationale, asserting no need for modifications.

Upon review, the Tribunal analyzed Rule 57A concerning MODVAT credit applicability, emphasizing the inputs' role in final product manufacturing. The Tribunal acknowledged the inputs' declaration, duty payment, and MODVAT credit availing by the respondents. The amendment clarifying captively produced inputs as eligible for MODVAT credit was interpreted as a clarification rather than a rule override. Denying credit for captively manufactured inputs pre-amendment was deemed incongruous, especially considering the exemption of such inputs from duty post-amendment. Consequently, the Tribunal upheld the Collector (Appeals) decision, rejecting the appeal.

In conclusion, the Tribunal dismissed the stay application and rejected the appeal, affirming the Collector (Appeals) decision on MODVAT credit entitlement for captively consumed inputs, emphasizing the importance of the amendment in broadening the scope of eligible inputs for MODVAT credit.