1991 (12) TMI 155 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal allowing Modvat credit for Aloxide Paper used in plywood manufacture.

Detailed Analysis:

1. Background: The appeal was filed by the Collector of Central Excise, Calcutta-II against the Order-in-Appeal allowing Modvat credit for Aloxide Paper used by M/s Andaman Timber Industries in plywood manufacture. The Assistant Collector had initially denied the Modvat credit, citing the exclusion of tools and appliances from the definition of "input" under Rule 57A.

2. Department's Argument: The Senior Departmental Representative argued that the department can challenge the issue on merits despite not appealing against the earlier order. He contended that the Aloxide Paper, although used in plywood manufacture, functions as a tool and falls under the excluded category of inputs, similar to drill bits or polishing stones.

3. Respondent's Argument: The consultant for the respondents highlighted that the Aloxide Paper was classified under a different sub-heading and was not alleged to be tools or appliances in the show cause notice. He emphasized that the goods in question were consumable items, not durable tools or machinery, citing relevant case law and definitions.

4. Rejoinder: The department reiterated that the Aloxide Paper could be considered as a tool, equipment, or machinery, thus falling under the excluded category of inputs. They argued that the paper's function as a tool is sufficient to exclude it from Modvat credit eligibility.

5. Judgment: The Tribunal analyzed the submissions and case law cited by both parties. It noted that the Chapter Note under Chapter 68, excluding tools from Chapter 82, was relevant for classification and Modvat purposes. The Tribunal rejected the department's attempt to introduce new grounds during the appeal, emphasizing that the Aloxide Paper did not qualify as equipment or machinery under Rule 57A.

6. Precedents: The Tribunal discussed relevant case law, such as Vikrant Tyres and Gwalior Rayon & Silk Mills, to support the decision that the Aloxide Paper was not an excluded type of input for Modvat credit. It distinguished the case from previous decisions concerning different goods and upheld the Order-in-Appeal allowing Modvat credit for the Aloxide Paper.

7. Conclusion: The Tribunal ruled that the coated abrasive paper used for polishing plywood did not fall under the excluded category of inputs and was eligible for Modvat credit. The department's appeal was dismissed, and the impugned Order-in-Appeal was upheld.

8. Cross-Objection: The Tribunal noted that the Cross-Objection filed by the respondents was more of an argument against the appeal rather than a separate objection. Since the appeal was dismissed, the Cross-Objection was disposed of accordingly.