1998 (4) TMI 262 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57F(3) regarding the utilization of Modvat credit for exported products.
2. Determination of the term "similar products" under Rule 57F(3).
3. Application of previous Tribunal decisions on the interpretation of Rule 57F(3).

Detailed Analysis:
1. The appeals were against the orders of the Commissioner of Central Excise (Appeals) regarding the utilization of Modvat credit by manufacturers exporting forged articles of steel and stainless steel under Chapter 73 of the Central Excise Tariff Act. The issue revolved around the appellants using duty credit on exported machined flanges to pay duty on clearances for home consumption of unmachined flanges under the same sub-heading. The lower authorities issued Show Cause Notices, alleging a violation of Rule 57F(3) as they considered the exported and home consumption products to be dissimilar. The Commissioner (Appeals) upheld these orders, stating that the products were not similar for the rule's purposes.

2. The Tribunal analyzed the term "similar products" under Rule 57F(3) based on previous decisions. Referring to the case law of Hindustan Motors Ltd. v. Collector of Central Excise, the Tribunal emphasized that the concept of similarity should extend beyond headings/sub-headings of the Tariff. The Tribunal held that if the rule-makers intended to restrict similarity to the same heading/sub-heading, they would have explicitly stated so. Relying on precedents like Ranbaxy and TELCO Ltd., the Tribunal concluded that the appellants were entitled to utilize credit earned on exported machined flanges for clearances of unmachined flanges under the same sub-heading, as per Rule 57F(3).

3. By applying the principles established in previous Tribunal decisions, the Tribunal ruled in favor of the appellants, allowing them to use Modvat credit for home consumption clearances of products falling under the same sub-heading as the exported items. The Tribunal's decision was guided by the broader interpretation of "similar products" under Rule 57F(3), as established in earlier cases. Consequently, the appeals were allowed, granting the appellants consequential relief in accordance with the law.