2004 (11) TMI 496 - AT - Central Excise

Summary

Issues: Availability of Modvat credit on rubber gloves under Rule 57-A as input.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI involved the issue of whether Modvat credit should be available to the respondents on rubber gloves under Rule 57-A as input. The respondents were engaged in manufacturing Chewing Gum and other confectionary items, and the rubber gloves were used by their workers in the manufacturing process. The adjudicating authority disallowed the Modvat credit, leading to a demand of Rs. 48,706/- with a penalty of Rs. 10,000/-. The Commissioner (Appeals) reversed this decision, stating that the gloves were used for the protection of workers' hands and goods from contamination. The learned counsel cited legal precedents to support the claim for Modvat credit, emphasizing the necessity of gloves in certain manufacturing processes.

However, the Tribunal disagreed with the arguments presented by the learned counsel. It was observed that the manufacturing activities of the respondents, involving Chewing Gum and confectionary items, did not involve sensitive or corrosive substances that required the use of gloves. The Tribunal held that the gloves were not integral to the manufacturing process and did not qualify as inputs for claiming Modvat credit under Rule 57-A. The Tribunal distinguished the cited legal precedents, noting that they were not directly applicable to the current case as they dealt with different circumstances and statutory provisions.

Consequently, the Tribunal set aside the decision of the Commissioner (Appeals) and upheld the order of the adjudicating authority disallowing the Modvat credit and imposing a penalty on the respondents. The appeal of the Revenue was accepted based on the findings that the gloves did not have a substantial relation to the manufacturing process of the final products, thus not meeting the criteria for claiming Modvat credit under Rule 57-A.