2000 (11) TMI 561 - AT - Central Excise

Summary

Issues:
1. Interpretation of Modvat scheme regarding certain items used in paper making machinery.

Analysis:
The case involved a dispute regarding the eligibility of Modvat credit on items like Dandy Covers, Dryer Felt, Press Felt, Industrial cloth, and Synthetic Wire used in paper making machinery. The Revenue filed an application seeking reference of a question of law arising from the Tribunal's Final Order, which allowed the credit on these items based on a previous decision. The Department sought disallowance of the credit, but the Commissioner (Appeals) overturned the decision. The Tribunal upheld the eligibility of these items for credit, citing a Larger Bench decision in the Union Carbide case. The Revenue then filed the application in question.

The Department argued that similar questions had been referred to other High Courts and that the Union Carbide decision had been referred to the jurisdictional High Court, thus supporting the need for reference in this case. However, the Counsel for the Respondents pointed out a Patna High Court decision and a recent Tribunal decision that favored allowing the credit on similar items, arguing against the need for a reference.

Upon careful consideration, the Tribunal noted that the questions referred to the Patna High Court did not cover the specific issue of Modvat credit eligibility for the items in question. Given that similar issues had been referred to various High Courts, the Tribunal agreed with the Revenue that the question of law raised in the application warranted reference. Consequently, the Tribunal decided to refer the question to the Madhya Pradesh High Court for resolution.

In conclusion, the Tribunal allowed the application for reference, emphasizing the need for clarification on whether the items in dispute qualified for Modvat credit under the Central Excise Rules.