1998 (10) TMI 197 - AT - Central Excise

Summary

Issues:
The appeal challenges the disallowance of Modvat credit for Hot Rolled Coils in plate form, contending that they are used in the manufacture of Storage and Processing Tanks for paper production.

Details of the Judgment:

1. The appeal contested the disallowance of Modvat credit for Hot Rolled Coils used in the manufacture of Storage and Processing Tanks for paper production. The claim was rejected on the basis that the coils were not considered inputs for paper manufacturing.

2. The appellant argued that the Hot Rolled Coils were utilized in the production of capital goods, specifically Storage and Processing Tanks essential for paper and paper-board manufacturing. Reference was made to Rule 57D, emphasizing that credit for inputs should not be denied when used in the manufacture of capital goods.

3. The Departmental Representative opposed the appellant's argument, asserting that Hot Rolled Coils were not directly related to paper manufacturing but were solely used for Tanks production, thus not qualifying as capital goods under Rule 57D(2).

4. The judgment analyzed the submissions and disagreed with the previous decisions, stating that Modvat credit is not contingent on direct use in manufacturing but includes inputs used in or related to the production of final products. Reference was made to Rule 57D and a clarification from the Customs Excise Advisory Council, affirming that credit input is available for inputs used in the manufacture of capital goods. Consequently, the appeal was allowed, and the impugned order was set aside.

5. The final decision favored the appellant, allowing the appeal and overturning the disallowance of Modvat credit for Hot Rolled Coils, recognizing their role in the production of capital goods for paper manufacturing.