1998 (2) TMI 211 - AT - Central Excise

Summary

Issues:
1. Interpretation of whether PVC profile shapes in the form of cut pieces are considered waste or an input for making 'PVC Fire Retardant'.
2. Utilization of Modvat credit on PVC profile shapes towards duty payment on PVC Fire Retardant Compound.

Analysis:
1. The case involved a dispute regarding the classification of cut pieces of PVC profile shapes as waste or inputs for manufacturing 'PVC Fire Retardant Compound'. The Commissioner (Appeals) relied on a previous decision where it was held that the cut pieces were waste and not eligible for Modvat credit. The Tribunal noted that the cut pieces were used in the manufacturing process of the final product, indicating they were intermediate products eligible for credit under Rule 57D(2). The Tribunal concluded that the cut pieces were indeed inputs for the Fire Retardant Compound, overturning the Commissioner's decision.

2. The appellants were availing Modvat credit on duty paid for PVC profile shapes used in manufacturing PVC doors, windows, and Fire Retardant Compound. The department contended that since the Fire Retardant Compound was made from cut pieces of PVC profiles, considered waste, the Modvat credit could not be applied towards duty payment for the compound. The Tribunal disagreed, stating that the cut pieces were indeed intermediate products used in the manufacturing process of the Fire Retardant Compound. As a result, the Tribunal set aside the Commissioner's decision and allowed the appeal, granting consequential relief in accordance with the law.

This judgment clarifies the distinction between waste and intermediate products in the context of Modvat credit utilization and highlights the importance of considering the manufacturing process when determining the eligibility of inputs for duty payment purposes.