1995 (12) TMI 195 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 57H regarding Modvat credit for inputs used in manufacturing final products.
- Rejection of Modvat credit by Assistant Collector based on Rule 57H(1)(i)(ii).
- Upholding of rejection by Collector (Appeals) based on Notification 117/87 and Rule 57H.
- Applicability of High Court judgment in Gilt Pack Ltd. v. Assistant Collector of Central Excise, Indore to the present case.

Analysis:
The case involved the appellants, engaged in manufacturing steel flats, seeking Modvat credit for specified inputs used in manufacturing final products cleared from the factory. The Assistant Collector rejected the credit request, citing Rule 57H(1)(i)(ii), which, according to the Collector (Appeals), required inputs to be in stock or received after filing the declaration under Rule 57G to be eligible for credit. The Collector (Appeals) also emphasized the significance of filing the declaration post-Notification 117/87, denying credit for inputs used before the declaration.

During the hearing, the appellant relied on the decision of the Madhya Pradesh High Court in Gilt Pack Ltd. v. Assistant Collector of Central Excise, Indore, which allowed credit for inputs used in manufacturing final products after 1-3-1987, irrespective of the timing of filing the declaration. The appellant argued for entitlement to credit based on this interpretation, contrary to the findings in the impugned order supported by the learned DR.

The analysis delved into Rule 57H, emphasizing its provisions regarding credit for inputs used in manufacturing final products. The High Court judgment highlighted the dual aspects of Rule 57H: inputs in stock or received post-declaration under Rule 57G and inputs used in final products cleared after 1-3-1987 without prior credit under other rules or notifications. The purpose was to grant credit for inputs already taxed and used in dutiable final products, as clarified by the Assistant Collector's understanding of the rule's intent.

Consequently, the Tribunal, following the High Court's interpretation, ruled in favor of the appellants, granting them the benefit of Modvat credit under Rule 57H(1)(i)(ii). The impugned order was set aside, and the appeal was allowed, with possible consequential relief for the appellants as deemed appropriate.