1993 (7) TMI 176 - AT - Central Excise

Summary

Issues: Interpretation of MODVAT Rule 57F(3) regarding credit utilization for inputs in manufacturing final products.

In this case, the main issue revolves around the interpretation of MODVAT Rule 57F(3) concerning the allowance of credit for inputs used in the production of final products. The appellants contended that they are entitled to credit under Rule 57A of the Central Excise Rules for duties paid on essential raw materials such as aluminium and copper, which are utilized in manufacturing aluminium copper winding wire and conductors. The appellants made a declaration under Rule 57G, specifying the final products and inputs. They argued that as per Rule 57F(3), credit for inputs can be used for payment of duty on final products falling under the same sub-heading, as accepted in previous Tribunal decisions. The Department emphasized the need for a specified input-output correlation under the MODVAT scheme. The appellants relied on Departmental clarifications supporting the utilization of excess credit for the same final products, even if manufactured from non-duty paid inputs.

The Tribunal analyzed Rule 57F(3) and noted that it allows credit for specified duty on inputs to be used for duty payment on final products related to the declared inputs. The proviso permits utilization of credit for inputs used in products cleared for export for similar final products cleared for home consumption. The Tribunal interpreted "any inputs" and "any of the final products" to mean products of the same broad class or category declared under Rule 57G, without requiring a one-to-one correlation. Since both inputs and outputs were declared, and duty on inputs was used for the same broad class of final products, the Tribunal found the appellants' arguments valid and accepted the appeals.