1994 (7) TMI 205 - AT - Central Excise

Summary

Issues:
1. Whether the Collector (Appeals) erred in allowing double credit on the same inputs, specifically on Aluminium ingots and wire rods.
2. Whether the Respondents were eligible for availing Modvat Credit without obtaining permission under Rule 57F(2).
3. Whether the Respondents were entitled to credit for duty paid on inputs lost in the manufacturing process at the job worker's factory.

Analysis:

Issue 1 - Double Credit on Inputs:
The Appeals raised concerns about the Collector (Appeals) allowing double credit on the same inputs, i.e., Aluminium ingots and wire rods. The Collector (Appeals) reasoned that the manufacturer could send inputs directly to the job worker under Rule 57F(2). However, the Appeals argued that this provision was not applicable in this case as the job worker had paid duty, contrary to the scheme's requirements. The Assistant Collector disallowed credit of duty paid by the primary manufacturer, which the Appeals supported. Ultimately, the Tribunal upheld the Assistant Collector's decision, stating that credit should only be allowed on the weight of wire rods actually received, not on processing loss.

Issue 2 - Eligibility for Modvat Credit:
The issue of eligibility for Modvat Credit without obtaining permission under Rule 57F(2) was also debated. The Respondents had not obtained the Assistant Collector's permission as required. However, the Respondents argued that previous tribunal decisions supported their eligibility for credit despite non-observance of procedural requirements. The Tribunal referred to past cases and held that the Respondents were eligible for Modvat Credit on duty paid on imported Aluminium Wire Bars and wire rods, subject to verification that the job worker had not already availed Modvat Credit on the wire bars.

Issue 3 - Credit for Inputs Lost in Manufacturing Process:
Regarding the Respondents' entitlement to credit for duty paid on inputs lost in the manufacturing process at the job worker's factory, the Cross Objections sought modification of the Collector (Appeals) order to allow credit for processing loss. The Tribunal noted that such waste should be returned to the manufacturer's factory under Rule 57F(3), which was not done in this case. Therefore, the Tribunal dismissed the Cross Objections, upholding the Collector (Appeals) decision on this issue.

In conclusion, the Tribunal dismissed the Department's Appeals subject to verification of certain conditions and upheld the Collector (Appeals) decision with modifications regarding Modvat Credit eligibility and processing loss credits. The Cross Objections filed by the Respondents were dismissed due to non-compliance with procedural requirements.