1994 (1) TMI 161 - AT - Central Excise

Summary

Issues: Appeal against denial of Modvat benefit for 'Thermex' and credit of duty paid under protest.

Analysis:

1. Modvat Benefit for 'Thermex':
- The appellant contended that 'Thermex' qualifies for Modvat benefit as it is used in the manufacturing process for B-Naphthol, maintaining high temperatures crucial for the chemical reaction. They cited the broad interpretation of the term 'in relation to' by the Supreme Court in Doypack Systems Pvt. Ltd. v. Union of India.
- The Assistant Collector held that 'Thermex' forms part of the machinery or equipment for temperature maintenance and thus is ineligible for Modvat Credit under Rule 57A. However, the Tribunal disagreed with this finding, citing precedents like J.K. Cotton Spinning and Weaving Mills Ltd. v. Sales Tax Officer and Collector of Central Excise v. Ballarpur Industries Limited.
- The Calcutta High Court's decision in Singh Alloys & Steel Ltd. v. Assistant Collector of Central Excise further supported the appellant's argument that chemicals used for machinery maintenance do not disqualify for Modvat Credit. The Tribunal allowed the appeal based on merit, aligning with the decision in Kopran Ltd. v. Collector of Central Excise.

2. Credit of Duty Paid Under Protest:
- The Superintendent issued a demand to reverse Modvat Credit on 'Thermex' without issuing a show cause notice, which the appellant contested through detailed replies. The Collector (Appeals) incorrectly held that the Superintendent's order was final as it was not appealed against, disregarding the appellant's legal contentions.
- The Tribunal clarified that the Superintendent's demand letter was not an appealable order but a directive lacking legal authority. The appellant had paid the duty under protest and properly responded to subsequent show cause notices. The Tribunal set aside the Collector (Appeals) finding, allowing the appeal and directing recrediting of the amount debited in response to the Superintendent's demand.

In conclusion, the Tribunal allowed the appeal, granting Modvat benefit for 'Thermex' and addressing the issue of credit of duty paid under protest, emphasizing the importance of legal procedures and precedents in determining eligibility for such benefits under the Central Excise Rules.