1999 (3) TMI 251 - AT - Central Excise

Summary

Issues:
1. Entitlement to Modvat credit on lost inputs due to evaporation.
2. Interpretation of Modvat scheme regarding usage of declared inputs in the manufacture of final products.

Analysis:
1. The appeal involved a dispute over the entitlement to Modvat credit on inputs lost due to evaporation. The Commissioner (Appeals) had denied the credit, stating that there was no dispute regarding the shortage of inputs, which was admitted by the appellants. The main contention was whether the Modvat credit could be claimed for inputs that were not physically available with the appellants.

2. The Tribunal considered the arguments presented by both sides. The appellants claimed that the evaporation of toluene, a volatile substance received from manufacturers, led to natural losses during storage, making them eligible for Modvat credit. On the other hand, the Departmental Representative argued that Modvat credit should only be available if the inputs were used in the manufacture of final products, emphasizing the purpose of the Modvat scheme.

3. The Tribunal referred to a judgment related to losses occurring during the manufacturing process of cement, highlighting the argument that certain losses are unavoidable. However, in the present case, it was not established that the toluene received had been used in the manufacture of final products. The Tribunal emphasized that Modvat credit can only be claimed if the declared input is utilized in or related to the manufacturing process of the final product.

4. Additionally, the Tribunal rejected the application of Rule 57D, which deals with the utilization of inputs in waste or by-products, as it was not applicable to the circumstances of the case. The Tribunal concluded that the appellant failed to demonstrate the usage of the input in the manufacture of the final product, leading to the dismissal of the appeal and the related stay petition.

5. The Tribunal also considered a judgment cited by the appellant but found it distinguishable from the facts of the case. It clarified that the provisions of Rule 57A were clear, emphasizing that Modvat credit could only be claimed when the input was used in or related to the manufacture of the final product. As the appellant did not establish such usage, the appeal was dismissed, and the stay petition was disposed of accordingly.