1996 (12) TMI 204 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57F(3) regarding credit of specified duty on inputs used in final products cleared for export.
2. Eligibility of Modvat credit on phosphoric acid used for purification.
3. Denial of Modvat credit on caustic soda lye due to lack of documentary evidence.

Analysis:

Issue 1: Interpretation of Rule 57F(3)
The Collector (Appeals) held that Rule 57F(3) allows credit of specified duty on inputs used in final products cleared for export under bond. The appellant contended that there were no exceptions or exemptions in the proviso to Rule 57F(3), thus supporting their appeal. The Department argued that the Modvat credit was wrongly availed as per the Import-Export Policy, which required no credit if goods were exported under certain schemes. The Tribunal agreed with the Collector (Appeals), stating that the provisions for replenishment of materials post-export cannot be imported into Modvat Rules, thus upholding the Modvat credit taken by the appellant for exported goods.

Issue 2: Modvat credit on phosphoric acid
The appellant claimed Modvat credit on phosphoric acid used for purification in soap manufacturing. The Department argued against this, stating phosphoric acid was not an input in soap production. The Tribunal found that phosphoric acid was indeed used in the manufacturing process, making it an input eligible for Modvat credit. Therefore, the Collector (Appeals) decision to allow Modvat credit on phosphoric acid was upheld.

Issue 3: Denial of Modvat credit on caustic soda lye
The Department denied Modvat credit on caustic soda lye due to the lack of duty paying documents provided by the respondents. The Tribunal concurred with this decision, stating that without proper documentation, Modvat credit could not be granted on caustic soda lye. Therefore, the denial of Modvat credit on caustic soda lye was upheld.

In conclusion, the Tribunal upheld the Collector (Appeals) decision regarding the interpretation of Rule 57F(3) and the eligibility of Modvat credit on phosphoric acid, while also agreeing with the denial of Modvat credit on caustic soda lye due to insufficient documentation. The appeal was disposed of accordingly.