2000 (7) TMI 642 - AT - Central Excise

Summary

Issues:
1. Interpretation of scope of show cause notice regarding use of Gantry Crane as an input for manufacturing final product.
2. Determination of whether Gantry Crane can be considered an input for manufacturing steel structures.
3. Assessment of Modvat credit eligibility based on Rule 57A requirements.
4. Consideration of point of law arising from Tribunal's final order.
5. Formulation of question for reference to the High Court regarding Modvat credit eligibility under Rule 57A.

Issue 1 - Scope of Show Cause Notice:
The Commissioner of Central Excise filed a reference application under Section 35G(1) of the Central Excise Act concerning the interpretation of the show cause notice's scope regarding the use of Gantry Crane as an input for manufacturing steel structures. The Tribunal allowed the appeal by concluding that the authorities had exceeded the allegations in the show cause notice. The appeal arose from the denial of Modvat credit on Gantry Crane, with the Commissioner asserting that it was not used in manufacturing steel structures. The Tribunal accepted the appellant's argument that the authorities had gone beyond the show cause notice, leading to the appeal's approval.

Issue 2 - Classification of Gantry Crane as Input:
The Commissioner contended that Gantry Crane did not qualify as an input for manufacturing steel structures, as it was a complete machine falling under a different classification. The Commissioner argued that Gantry Crane could not be considered an input for steel structures under Chapter Heading 73.08. The Tribunal accepted the appellant's submission that the orders had exceeded the show cause notice's scope, leading to the allowance of the appeal.

Issue 3 - Modvat Credit Eligibility:
The Judicial Member pointed out that merely mentioning a tariff entry eligible for Modvat credit in the declaration under Rule 57G was insufficient to claim Modvat credit under Rule 57A. The show cause notice highlighted the incorrect availment of credit by the appellants, violating the provisions of Rule 57A and Rule 57G. The Tribunal's final order raised a legal point regarding the necessity for the input to be used in or in relation to the manufacture of the final product for availing Modvat credit.

Issue 4 - Point of Law Arising from Tribunal's Order:
Despite the absence of representation from the respondent, the Tribunal considered that a point of law had emerged from the final order. The Tribunal modified the question formulated in the reference application and directed its submission to the High Court for consideration. The question addressed whether an assessee needed to demonstrate that the input specified in the declaration was used in manufacturing the final product to avail Modvat credit.

Issue 5 - Formulation of Question for High Court Reference:
The Tribunal formulated a question for reference to the High Court concerning the requirement for an assessee to prove that the input specified in the declaration was used in or in relation to the manufacture of the final product for availing Modvat credit under Rule 57A. The Registry was instructed to forward the reference to the High Court under Section 35H of the Central Excise Act, disposing of the Reference Application accordingly.