2014 (8) TMI 286 - AT - Central Excise

Wrong availment of MODVAT Credit - It was alleged that except one grade i.e. Relene E-41003 all other grades of plastic granules could not be used in the manufacture of HDPE Pipes, conforming to the specification as ordered by the Department of Telecommunication - Adjudicating Authority dropped the proceedings initiated - Held that - Appellants are manufacturers of HDPE Pipes and the same are supplied to DOT against various contracts. The Revenue s case is that in the manufacture of the said HDPE Pipes, the Respondent used inputs, i.e. HDPE granules/plastic granules of various grades, on which they had availed modvat credit. Taking note of a Certificate issued by the Central Institute of Plastics Engineering and Technology, Bhubaneswar, that such HDPE Pipes cannot be manufactured from the HDPE/Plastic granules, as such, other than from Relene-E-41003 grade, the modvat credit was held to be inadmissible on HDPE granules other than Relene E-41003. On the other hand, it is the case of the Respondent that they have been using HDPE granules Relene E-41003 after blending with other grades of HDPE/Plastic granules in the manufacture of HDPE pipes supplied to DOT - Appellants are blending/mixing Relene E-41003 and other grades of HDPE granules in the manufacture of HDPE Pipes, which are ultimately supplied to DOT - Department itself has acknowledged that the Appellants are blending/mixing Relene E-41003 and other grades of HDPE granules in the manufacture of HDPE Pipes, which are ultimately supplied to DOT - Decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Original alleging wrongful availing of modvat credit on HDPE granules
- Adjudicating authority's decision based on facts and previous Tribunal judgments
- Revenue's contention of mechanical following of earlier order without analysis
- Argument regarding suitability of HDPE granules for manufacturing HDPE Pipes
- Comparison of facts with previous Tribunal decisions favoring the Assessee-Respondent
- Preclusion of Revenue from taking a different stand based on previous judgments
- Examination of blending of HDPE granules by the Respondent in manufacturing HDPE Pipes

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Original alleging the wrongful availing of modvat credit on HDPE granules used in manufacturing HDPE Pipes. The Adjudicating Authority considered facts and previous Tribunal judgments, dropping the proceedings against the Assessee-Respondent. The Revenue contended that the authority mechanically followed earlier orders without proper analysis, arguing the unsuitability of certain HDPE granules for manufacturing HDPE Pipes as per Department of Telecommunication specifications.

2. The Revenue's representative highlighted the opinion of the Central Institute of Plastics Engineering and Technology, stating that certain HDPE granules, apart from one specific grade, were not suitable for manufacturing HDPE Pipes. They argued that previous Tribunal judgments were not applicable to the present case, emphasizing the need for a different outcome if all points were considered. The Respondent's consultant referenced similar cases where the Tribunal ruled in favor of the Assessee-Respondent, indicating consistency in decisions.

3. The Tribunal examined the undisputed fact that the Appellants manufactured HDPE Pipes supplied to the Department of Telecommunication using various HDPE granules. The Revenue contended that modvat credit was inadmissible on HDPE granules other than a specific grade, while the Respondent claimed to blend different HDPE granules, including the specified grade, in manufacturing HDPE Pipes. The Tribunal referred to previous cases where blending of granules for HDPE Pipes was accepted, supporting the Respondent's position.

4. The Tribunal cited a previous case where the Department failed to provide evidence regarding the purchase and use of specific granules for manufacturing HDPE Pipes. It was noted that blending different grades of HDPE granules could produce material conforming to specifications. Subsequent cases followed this decision, emphasizing the lack of factual difference. The Tribunal upheld the order of the Commissioner, rejecting the Revenue's appeal based on the acknowledgment of blending practices by the Department itself.

5. In conclusion, the Tribunal upheld the decision in favor of the Assessee-Respondent based on the consistent application of blending practices in manufacturing HDPE Pipes. The appeal filed by the Revenue was rejected, highlighting the importance of considering blending practices and previous Tribunal judgments in similar cases.