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TMI Blog1996 (2) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal, they have urged the following grounds : 1. The Collector of Central Excise (Appeals) erred in not appreciating the fact that the rejected goods were received back by the manufacturers and that they had not complied with the provisions of Rule 173H or 173L by filing D. 3 intimation to the Department. 2. The Collector of Central Excise (Appeals ) failed to appreciate that the final product manufactured viz. Seat Kushy cannot be an input again as it violates the definition of manufacture under Section 2(f) of the Central Excises Salt Act, 1944 read with Rules 57A 57-I of the Central Excise Rules, 1944. 3. The Collector (Appeals) failed to appreciate the provisions of Rule 57A of the Central Excise Rules, 1944 as the duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty. He drew my attention to the reasoning of the learned lower appellate authority reproduced below : Even otherwise for taking credit this is not a relevant factor because `inputs even as per the definition in the Rule 57A can be the goods produced and captively consumed in the manufacture of the final product in the same factory of production. In other words an assesses if he has to pay duty on goods produced in his own factory for captive use can take the credit of such duty paid to be utilised towards payment of duty on the final product produced by himself again. The fact that he himself is the manufacturer of the inputs and the final product is not a bar in availing the credit. What has to be seen is whether such goods on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mantling obviously resulted in breaking up of the item into various components and thereafter utilisation of the same for manufacture of seat kushy in the respondents factory out of the parts which would have been found serviceable or usable. In this process, some of the parts would have been discarded. This position was confirmed by the learned Consultant for the respondents. The position that emerges in that defective `seat kushy which on return to the respondents factory in respect of which MODVAT Credit had been taken were dismantled and only some of the parts were used in the manufacture of the newly manufactured seat kushy. The input, therefore, which had gone into the newly manufactured kushy seats was only some of the retrieved pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of manufacture. In the present case, it cannot be said that without use of the returned kushy seats, manufacturing process in the respondents factory cannot be carried on or scraping of the seats was integrally connected with the manufacture of the kushy seats in the respondents factory. Scraping in fact has resulted in emergence of parts which had gone into making of new kushy seats and it can only be taken to be with reference to retrieval of these parts which earlier went into the making of the goods. In view of the above position, I hold that retrieved parts used as inputs in the manufacture of new kushy seats cannot be considered as inputs used in relation to the manufacture in the respondents factory. I therefore, hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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