1992 (2) TMI 248 - AT - Central Excise

Summary

Issues:
The appeal challenges the denial of Modvat credit on Alkyd Resin, Maleic Resin, and Fumaric Resin used as inputs in the manufacture of paints and varnish, based on the contention that these goods were exempt from duty under Notification 53/88.

Issue 1: Denial of Modvat Credit
The Collector (Appeals) held that the resins were fully manufactured goods and not intermediate goods, thus denying Modvat credit. The Tribunal decision in Jenson & Nicholson case was considered distinguishable as it related to a different notification.

Issue 2: Interpretation of Rule 57D(2)
The Appellant argued that the resins should be treated as intermediate products, citing various decisions supporting their position. They contended that Rule 57D(2) protects the availability of Modvat credit on inputs used in the manufacture of final products through intermediate stages.

Issue 3: Scope of Rule 57D(2)
The Departmental Representative argued that Rule 57D(2) only applies to intermediate products arising unintentionally during manufacturing, not deliberately produced goods like resins. They claimed that deliberate manufacturing of resins does not fall within the rule's scope.

The Tribunal found that the Appellant's case was covered by Rule 57D(2) and upheld their argument. The term "intermediate product" was interpreted in the context of manufacturing processes and use in final products. The decision in Jenson & Nicholson case was deemed applicable to the present situation under the Modvat Scheme.

The Tribunal rejected the Departmental Representative's argument that Rule 57D(2) only covers unintentional by-products, stating that even deliberate production of intermediate goods is protected under the rule. The Collector (Appeals) was found to have erred in not considering the facts and submissions properly, leading to an incorrect decision to deny Modvat credit. The appeal was allowed with consequential benefits granted.