2000 (12) TMI 646 - AT - Central Excise

Summary

Issues:
- Denial of Modvat credit for Filter pads used in the manufacture of Gelatine as input under Rule 57A of the Central Excise Rules.

Detailed Analysis:
1. The appeals involved a common issue of denying the benefit of Modvat credit for Filter pads used in Gelatine manufacture. The show cause notice was based on the decision in the case of Escorts Ltd., where Filter Mesh was deemed ineligible for Modvat credit. However, the appellant argued citing the decision in the case of Union Carbide India Ltd. that Wire Mesh and Felts used in paper manufacturing are parts of a machine and thus eligible for credit.

2. The Larger Bench of the Tribunal in the case of Union Carbide India Ltd. held that Wire Mesh, Wire Cloth, and Felts are parts of a machine and not excluded from the definition of inputs. The Hon'ble Patna High Court also approved this decision, stating that various materials like Felts, Phosphor Bronze, Stainless Steel Wire Cloth, Wire Mesh, and Dandy cloth used in paper manufacturing are eligible inputs and not excluded under Rule 57A.

3. The Hon'ble High Court concurred with the Tribunal's decision and set aside the impugned order, allowing the appeals. The appellants were granted consequential relief as per the law. The judgment highlighted the importance of considering the nature of materials used in manufacturing processes to determine their eligibility for Modvat credit under Rule 57A of the Central Excise Rules.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the reasoning behind the decision to allow the appeals based on the eligibility of Filter pads as inputs for Modvat credit in the manufacture of Gelatine.