1999 (8) TMI 198 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal allowing modvat credit on 12 items, Contradictory decisions by SRB of CEGAT on the interpretation of Rule 57Q and Rule 57S, Validity of Tribunal decisions in M.M. Forgings Ltd. and Trichy Distilleries & Chemicals Ltd.

Analysis:
The Revenue appealed against an Order-in-Appeal allowing modvat credit on 12 items, challenging the decision based on the interpretation of Rule 57Q and Rule 57S. The Revenue contended that the Commissioner (Appeals) erred in applying the decision of the Tribunal in M.M. Forgings Ltd., which considered Rule 57Q in conjunction with Rule 57S for determining modvat credit eligibility. The Revenue highlighted contradictory decisions by the SRB of CEGAT, particularly referencing the case of Trichy Distilleries and Chemicals Ltd., which did not align with the interpretation in M.M. Forgings Ltd. The Revenue also mentioned a pending petition before the High Court regarding the matter, emphasizing the lack of finality in the interpretation of the rules.

The Respondents, represented by an advocate, argued in favor of upholding the decision based on M.M. Forgings Ltd., emphasizing that it was a later decision and relied on principles established by the Hon'ble Supreme Court. The advocate pointed out that the Tribunal's reliance on an earlier decision in Velathal Spinning Mills in the case of Trichy Distilleries & Chemicals Ltd. was due to the Tribunal not being made aware of the later decision in M.M. Forgings Ltd. The advocate highlighted the consistent application of the M.M. Forgings Ltd. decision by the SRB of the Tribunal, indicating that it had become a well-settled practice.

After considering the submissions and records, the judge found that the Tribunal's decision in M.M. Forgings Ltd. was based on principles from the Hon'ble Supreme Court and had been consistently followed by the SRB of the Tribunal. The judge noted that the earlier decision in Velathal Spinning Mills was superseded by the later decision in M.M. Forgings Ltd., which had not been brought to the Tribunal's attention in subsequent cases. Therefore, the judge concluded that the Commissioner (Appeals) correctly applied the M.M. Forgings Ltd. decision and dismissed the Revenue's appeal, stating that there was no error or infirmity in the Order-in-Appeal.

In summary, the judgment upheld the decision allowing modvat credit on 12 items based on the interpretation of Rule 57Q and Rule 57S, emphasizing the precedence of the M.M. Forgings Ltd. decision over earlier conflicting decisions and establishing it as the prevailing authority in such cases.