1993 (10) TMI 160 - AT - Central Excise

Summary

Issues:
1. Availability of MODVAT Credit for Acetylene and Oxygen gases used for purification and melting.
2. Eligibility for MODVAT Credit on graphite nipples without proper declaration.

Analysis:
1. The appeal was filed by the Revenue challenging the Collector (Appeals) findings that MODVAT Credit is available for Acetylene and Oxygen gases used in the purification and easy melting of metal. The Revenue argued that these gases were used for cutting scraps, which they contended was a process preceding manufacturing, thus not eligible for MODVAT Credit. Additionally, the Revenue claimed that the Respondents did not declare the Graphite nipples in the required declaration, making them ineligible for MODVAT Credit on these inputs. However, the Respondents argued that the gases were essential for the manufacturing process as they were used to prepare the scrap for feeding into the furnace, making them eligible for MODVAT Credit. The Tribunal held that cutting the scrap was a necessary operation preparatory to the manufacturing process, thus allowing MODVAT Credit for the duty paid on Acetylene and Oxygen gases.

2. Regarding the Graphite nipples, the Respondents admitted to not filing a declaration as required under Rule 57G. The Tribunal emphasized that filing a declaration is a statutory requirement for claiming MODVAT Credit on inputs. The Respondents' argument citing previous judgments was deemed irrelevant, as the failure to file a declaration rendered them ineligible for the credit on Graphite nipples. The Tribunal concluded that the lower appellate authority erred in granting MODVAT Credit to the Respondents for Graphite nipples due to the absence of a proper declaration. As a result, the appeal was partially allowed, denying MODVAT Credit for Graphite nipples but upholding it for Acetylene and Oxygen gases used in the manufacturing process.