1996 (9) TMI 398 - AT - Central Excise

Summary

Issues:
1. Benefit of Modvat credit on inputs used in the manufacture of miniature bulbs cleared for home consumption.

Analysis:
The appellant, engaged in manufacturing torches and miniature bulbs, filed an appeal against the Order-in-Appeal passed by the Commissioner (Appeals) Central Excise, Allahabad. The dispute revolved around the denial of Modvat credit for 11 inputs used in manufacturing miniature bulbs cleared for home consumption after paying excise duty. The appellant argued that they had filed separate classification lists for torches and miniature bulbs, clearly indicating captive consumption for torch manufacturing as well as home consumption for miniature bulbs. The appellant also pointed out the declaration filed under Rule 57G acknowledging the use of 11 inputs in miniature bulb production. Additionally, they mentioned a letter specifying that clearance of miniature bulbs for sale would be after payment of excise duty. The appellant contended that since the adjudicating authority had no objection to using inputs for miniature bulbs in torch manufacturing, the same should apply to bulbs cleared for home consumption. The appellant sought Modvat credit for inputs used in miniature bulbs cleared for home consumption.

The adjudicating authority denied Modvat credit for inputs used in manufacturing miniature bulbs cleared for home consumption, citing that the declaration by the appellant only mentioned torches as the final product, not miniature bulbs. However, upon reviewing the documents submitted by the appellant, including the declaration and classification list specifically for miniature bulbs, it was observed that the appellant had duly declared the inputs used in miniature bulb production. The appellant had also explicitly stated that clearance of miniature bulbs for sale would be after paying excise duty. Given that the adjudicating authority had no objection to using inputs for miniature bulbs in torch manufacturing, it was concluded that the same inputs used in bulbs cleared for home consumption should also be eligible for Modvat credit. Consequently, the impugned order denying Modvat credit on inputs used in miniature bulbs cleared for home consumption was set aside, and the appeal was allowed.