1998 (12) TMI 346 - Commissioner - Central Excise

Summary

Issues:
1. Disallowance of credit of duty on polyester staple fiber.
2. Utilization of credit of duty earned before 16-3-1995.
3. Non-accounting of polyester staple fiber.

Analysis:

1. The appellant, a yarn manufacturer, appealed against disallowance of credit of duty on polyester staple fiber by the lower authority. The appellant argued that the inputs were not cleared for sale but for conversion to their sister units, hence credit should not be disallowed. They cited relevant case laws to support their claim. The Commissioner agreed with the appellant, stating that credit of duty should not be reversed when inputs are sent for further processes on a job work basis under Rule 57F. The Commissioner referenced Tribunal orders to support this stance. However, the Commissioner noted the lack of clarity on whether the manufactured yarn from the polyester staple fiber had been received back and proper excise duty paid. The appellant was directed to pay duty if not already done.

2. The appellant also contested the disallowance of utilizing credit of duty earned before 16-3-1995. They argued that as per Rule 57F(4)(1), such credit could be utilized even after the specified date. The Commissioner, however, ruled against the appellant, stating that the credit was not intended for use in manufacturing cotton yarn and therefore inadmissible. Provisions cited by the appellant were deemed inapplicable, leading to a conclusion that the appellant wrongly availed the credit.

3. Lastly, the issue of non-accounting for 413 kgs of polyester staple fiber was addressed. The appellant clarified that the unprocessed fiber was sent to another unit for conversion, and an invoice was raised for clearance. The Commissioner accepted the appellant's explanation on this matter.

In conclusion, the appeal was partially allowed, modifying the lower authority's order based on the above analysis of the issues raised by the appellant in the case.