1995 (6) TMI 123 - AT - Central Excise

Summary

Issues:
1. Whether Modvat Credit taken on inputs used in the manufacture of commercial plywood can be recovered from the appellants.
2. Whether the goods cleared by the appellants under Rule 191B can be considered as exports for Modvat purposes.

Analysis:

1. The appeal challenged an order requiring the appellants to pay an amount for Modvat Credit taken on inputs used in manufacturing commercial plywood cleared without duty payment. The lower authority based its decision on the requirement that both the input and final product must have suffered duty for claiming credit. The appellant's argument that the goods were ultimately exported and should qualify for Modvat benefit was rejected. The Tribunal analyzed the provisions of Rule 57A and 57F, emphasizing the duty payment requirement for claiming credit. The Tribunal upheld the lower authority's decision, stating that the appellant failed to meet the basic requirements for claiming credit.

2. The second issue revolved around whether goods cleared under Rule 191B by the appellants could be considered exports for Modvat purposes. The appellants argued that since the finished products were ultimately exported, they should receive the benefit under Rule 57F. The Tribunal examined the provisions of Rule 191B, which governs the manufacture and export of goods without duty payment. It noted the comprehensive procedures under Rule 191B for accounting and duty payment in case of non-export. Despite the absence of specific mention in Rule 57F regarding units operating under Rule 191B, the Tribunal held that such units should receive the same benefit as units in free trade zones or export-oriented units. The Tribunal concluded that the appellants' plea should be allowed, extending the benefit under Rule 57F(3) to units operating under Rule 191B.

In conclusion, the Tribunal upheld the decision requiring the appellants to pay Modvat Credit on inputs and allowed their plea regarding the treatment of goods cleared under Rule 191B as exports for Modvat purposes. The judgment provided a detailed analysis of the legal provisions governing Modvat Credit and export procedures under Rule 191B, ensuring a comprehensive understanding of the issues involved.