1989 (1) TMI 279 - AT - Central Excise

Summary

Issues:
- Availment of MODVAT credit by the appellants on their inputs
- Interpretation of Rule 57H of the Central Excise Rules
- Eligibility of inputs for MODVAT credit under transitional provisions

Analysis:

Availment of MODVAT credit:
The appeal challenged the order passed by the Collector of Central Excise (Appeals), Madras, regarding the availment of MODVAT credit by the appellants on their inputs used in the manufacturing of multi-layer plastic films. The Assistant Collector initially disallowed the MODVAT credit on inputs received before 4-3-1986 when the finished product became dutiable. The Collector (Appeals) partially allowed the appeal, stating that inputs used in the final product after it became dutiable would be eligible for MODVAT credit under Rule 57H of the Central Excise Rules.

Interpretation of Rule 57H:
The appellants argued that Rule 57H should apply to inputs received before the filing of the declaration under Rule 57G, as long as those inputs were utilized in the manufacture of the final product on which duty was paid. The Collector (Appeals) also highlighted the importance of Rule 57H, stating that it comes into operation for inputs received before the filing of the declaration. The rule outlines specific criteria for allowing MODVAT credit on inputs, including the date of receipt, utilization in manufacturing, and payment of duty.

Eligibility of inputs under transitional provisions:
The key contention revolved around whether the inputs lying in stock on 1-3-1986 and used in the manufacture of the final product, which became dutiable from 4-3-1986, should be eligible for MODVAT credit. The appellants demonstrated that the inputs met the criteria specified in Rule 57H, and the Collector (Appeals) agreed that the transitional provisions should apply. Ultimately, the appeal was allowed, subject to the Assistant Collector ensuring that all conditions under Rule 57H were fulfilled before granting MODVAT credit on the inputs received by the appellants prior to the filing of the declaration under Rule 57G.

This judgment clarifies the application of Rule 57H in determining the eligibility of inputs for MODVAT credit under transitional provisions, emphasizing the importance of compliance with the specified criteria outlined in the Central Excise Rules.