1998 (2) TMI 313 - AT - Central Excise

Summary

Issues:
1. Whether the credit taken on scrap used in the manufacture of steel billets/ingots for the production of CTD bars, flats, rounds, and channels is admissible for discharging duty.
2. Whether the embargo laid down by Rule 57C is absolute and categorical.

Analysis:
1. The appellant contested that the credit taken on scrap used in manufacturing steel billets/ingots for producing CTD bars, flats, rounds, and channels should not be admissible for discharging duty. The appellant argued that the scrap was not declared as an input for the final products and was not an input for the final product. The appellant emphasized the need for a complete description of inputs under the Modvat scheme. The appellant also contended that since ingots and billets manufactured from duty-paid scrap are exempt, Rule 57C prohibits taking credit on inputs for exempt final products. The appellant requested the High Court to consider these legal points.

2. The respondent, on the other hand, argued that the scrap and ingots were declared as inputs for steel billets, flats, rounds, angles, and channels. The respondent maintained that the declaration included scrap and ingots as inputs alongside billets. The respondent cited Rule 57D(2) to support the argument that if an intermediate product is exempted, the credit of duty paid on inputs need not be denied. The respondent contended that the embargo under Rule 57C would not be applicable in this case. The respondent opposed the appellant's arguments and requested the application for reference to be rejected.

3. The Tribunal examined the issues raised by both parties. It found that the process of manufacture and the definition of intermediate and final products were crucial in determining the admissibility of credit on scrap used in manufacturing steel billets/ingots. The Tribunal referred to a previous decision to clarify the concept of intermediate and final products under the Modvat credit scheme. The Tribunal concluded that steel ingots and billets were intermediate products in the process of manufacturing flats, rounds, angles, and channels. Therefore, the Tribunal held that the embargo under Rule 57C would not be applicable in this case. Additionally, the Tribunal noted that the inputs, including scrap and ingots, were declared in the Modvat declaration, refuting the appellant's claim. Consequently, the Tribunal found no legal point arising from its order and rejected the application for reference to the High Court.

In conclusion, the Tribunal ruled in favor of the respondent, determining that the credit on scrap used in manufacturing steel billets/ingots for producing CTD bars, flats, rounds, and channels was admissible for discharging duty. The Tribunal also clarified that the embargo under Rule 57C was not absolute and categorical in this context.