2000 (1) TMI 531 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit on wire mesh and felts used in manufacturing writing and printing paper.
2. Interpretation of Rule 57A of the Central Excise Rules regarding eligibility for Modvat credit.
3. Appeal against the decision of the Commissioner (Appeals) by the Department.
4. Question of law arising from the case of Union Carbide India Limited regarding Modvat credit on wire mesh and felts.

Analysis:
Issue 1: The Department disallowed Modvat credit on wire mesh and felts used in manufacturing writing and printing paper, stating that these items were parts of the machinery of the paper manufacturers, not inputs under Rule 57A. The Commissioner (Appeals) overturned this decision, citing the Tribunal's Larger Bench decision in Union Carbide India Limited case, which held that wires and felts were eligible for Modvat credit as inputs used in relation to the manufacture of final products.

Issue 2: The interpretation of Rule 57A of the Central Excise Rules was crucial in determining the eligibility for Modvat credit. The Tribunal's decision in the Union Carbide India Limited case established that wire mesh and felts were considered inputs under Rule 57A, allowing paper manufacturers to avail of the credit for duty paid on these items.

Issue 3: The Department appealed the decision of the Commissioner (Appeals) before the Tribunal, challenging the allowance of Modvat credit on wire mesh and felts. However, the Tribunal dismissed the appeal, upholding the decision based on the precedent set by the Union Carbide India Limited case.

Issue 4: The question of law regarding the admissibility of Modvat credit on wire mesh and felts was raised by the Department in the present application. The Tribunal found that this question had already been referred from the Union Carbide India Limited case to the jurisdictional High Court. Consequently, the Tribunal allowed the application, directing the Registry to refer the question of law to the Hon'ble High Court of Punjab and Haryana under Section 35G(1) of the Central Excise Act.