2005 (7) TMI 412 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57J and Rule 57A in the context of Modvat credit for inputs sent for job work.

Analysis:
The appellant, a manufacturer of polyester films, sent inputs like PTA and MEG to job workers for conversion into polyester chips, which were then used in manufacturing polyester films. The dispute centered around whether the restriction on credit availability (only 95%) under Notification No. 5/94-C.E. applied to inputs sent for job work. The appellant argued that Rule 57J, with a non obstante clause, allowed full credit irrespective of other Modvat Rules. They cited a previous Tribunal decision supporting their stance. The respondent contended that Rule 57J did not alter the specified duties under Rule 57A for Modvat credit and criticized the earlier decision.

Upon careful examination of Rule 57A and Rule 57J, the Tribunal found that Rule 57A specified the duties eligible for credit under the Modvat scheme. Rule 57J, while enabling credit for inputs sent to job workers, did not define the duties or their extent for credit. The non obstante clause did not expand the scope of specified duties; hence, the credit limit remained as per Notification No. 5/94-C.E. The Tribunal opined that the appellant could not claim more credit than stipulated under the notification. Consequently, the Tribunal disagreed with the previous decision and held that the appellant's interpretation was incorrect.

In conclusion, the appeals were deemed meritless and rejected by the Tribunal on 11-7-2005.