1995 (2) TMI 220 - AT - Central Excise

Summary

Issues:
1. Classification of DC Drive under Modvat declaration.
2. Declaration of final products for availing Modvat credit.

Analysis:

Issue 1: Classification of DC Drive under Modvat declaration
The appellants, manufacturers of plastic extrusion plant, classified DC Drive as an input under Chapter Heading 9032.80. However, the gate pass described it as DC Drive, raising concerns about Modvat credit eligibility. The Tribunal noted that DC drive is used in the manufacture of the final product as an input and component. The description "speed regulator" in the declaration was contested. The Tribunal analyzed the definition of "speed regulator" and concluded that it covers devices regulating the speed of any apparatus, including motors. Despite the generic nature of the term, the Tribunal held that the intention to avail of credit for a speed regulator of a motor was evident in the declaration. Rule 57G mandates declaring inputs before actual receipt, allowing flexibility in matching descriptions. Therefore, the Tribunal ruled in favor of the appellants, stating that the description "speed regulator" includes DC Drive, making them eligible for Modvat credit.

Issue 2: Declaration of final products for availing Modvat credit
The second issue pertained to certain final products like Vacuum tanks, hot stamping machines, etc., not being declared for availing Modvat credit. These products were parts of the plastic extrusion plant and reportedly classifiable under Tariff Heading 8477. The department alleged non-declaration of these final products, potentially impacting Modvat credit eligibility for inputs. The Tribunal allowed the department to verify if the undeclared final products were ineligible for Modvat credit based on the inputs declared. If so, duty payment from PLA would restore credit in RG-23A for declared final products. The Tribunal clarified that non-declaration of final products should not extinguish credit earned on declared inputs, which can be used for duty payment on declared final products. Therefore, the objection was deemed technically valid but did not affect the credit earned on declared inputs.

In conclusion, the appeal was disposed of in favor of the appellants, with directions for verifying the eligibility of undeclared final products for Modvat credit and ensuring the restoration of credit for declared final products when applicable.