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TMI Blog1996 (6) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The appellants are engaged in the manufacture of generating set falling under Heading 85.02 and were availing the benefit of input duty credit under Modvat Scheme. Checking of RT 12 returns for the month of October, 1993 revealed that credit of Rs. 6,909.92 was taken on batteries fitted with the generating set. It was alleged by the Department that batteries fitted with generating set were not inputs used in or in relation to the manufacture of generating sets and therefore, they were not eligible for Modvat credit. Accordingly, a show-cause notice was issued to the appellants asking them to explain as to why the Modvat credit taken by them should not be dis-allowed and the duty should not be demanded from them. 3. The learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellants manufactured only generating set; the battery was not integral part of the generating set but that generating set is marketable without batteries; that when batteries are exhausted, they are rejected and not the generating set is replaced. The learned DR reiterated the findings of the lower authorities. 5. Heard the submissions of both sides and considered them. I find that the appellants have contested that while assessing the generating set they have asked the appellants to include the value of the battery in the assessable value of the generating set It means that the Department considers the battery an integral part or an essential part of the generating set. Once the department considers it an integral part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the final product. The economic objective of the scheme is to mitigate the burden of levies on inputs going into the manufacture of the final product, by giving credit in respect of the duty paid on all inputs, which go into the making of the goods for delivery at the factory gate by the manufacturer. Thus, the scheme could be brought within the purview of excise law and would not disturb the Centre-State division of Taxation powers. In this background, we are to take a view that the inputs, which go upto the stage of ready for delivery at the factory gate, may have to be given the credit and this is also in line with the law as per the ratio of the decision of the Apex Court. If, on the revenue or other considerations, the Govt. wants t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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