1990 (3) TMI 206 - AT - Central Excise

Summary

Issues:
Appeal against order allowing credit under Rule 57K for Minor Oils despite non-utilization in final product in a specific month.

Detailed Analysis:
1. The Collector of Central Excise, Patna appealed against the order allowing M/s. Ganga Vanaspati Ltd. to avail credit under Rule 57K for Minor Oils, even though these oils were not used in the final product in a particular month. The Collector argued that credit can only be utilized if the inputs are used in the manufacture of final products, which was not the case in June '87.

2. The appellant contended that Rule 57P(b) allows disallowance of credit if inputs for which credit was taken are not used in the final products. The Collector disagreed with the application of Ministry of Finance instructions, stating that the dispute was about the non-utilization of Minor Oils in the final product, not about duty paid or non-duty paid inputs.

3. The SDR supported the appeal, emphasizing that credit should not be permitted if the input was not utilized in the final product's manufacture.

4. The respondents argued that Rule 57N allows credit utilization for final products for which inputs are intended to be used, emphasizing the continuous nature of the manufacturing process. They opposed the appeal, stating that the intention was to use Minor Oils in the final products.

5. The SDR sought to rebut the respondents' arguments, stating that Rule 57K does not support the interpretation claimed by the respondents.

6. The Tribunal analyzed the case, noting that the appeal centered on the utilization of credit for Minor Oils not used in the final product in June '87. The Tribunal considered the provisions of Rule 57K, 57N, and 57P, along with Notification 27/87-CE. The Tribunal highlighted the conditions for credit utilization and the timing restrictions specified in the notification.

7. The Tribunal concluded that credit can only be utilized after the Minor Oils are hydrogenated and in subsequent months. It noted the absence of a requirement for a direct correlation between inputs and outputs. The Tribunal found that as long as credit was allowed after hydrogenation, its utilization could not be restricted based on the presence of Minor Oils in each batch of the final product. The Tribunal upheld the Order-in-Appeal, stating that the respondents were entitled to the relief granted by the Collector of Central Excise (Appeals), Calcutta.