9911796707
TMI Blog1997 (3) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,50,89,489 1-1-1993 to 31-3-1993 2,65,10,644.00 1-4-1993 to 16-6-1993 Credit has been disallowed on the ground that the motor vehicle seats are final products in themselves which are chargeable to nil rate of duty under Heading 9401.00 of the Central Excise Tariff Act, 1985 read with Sl. No. 2 of Notification 80/90, dated 20-3-1990 and, therefore, hit by the provisions of Rule 57C of the Central Excise Rules. The case of the Department further is that the seats are not intermediate goods for motor vehicles. 2. The appellants are Central Excise Licencees engaged in the manufacture of motor vehicles falling for classification under Heading 87.03 of the CETA, 1985. They availed of modvat credit of duty paid on inputs for motor vehicles as per declaration filed in terms of Rule 57G wherein parts of motor vehicle seats as well as seats have been declared as inputs for motor vehicles. They availed modvat credit on the parts of motor vehicles seats which were got manufactured by M/s. Bharat Seats Ltd., in accordance with the provisions of Rule 57F(2). They had obtained general permission from the Jurisdictional Assistant Collector, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring the same in the Modvat declaration and that the appellants had contravened Rule 57C inasmuch as they had availed Modvat credit on the inputs of motor vehicle seats which are fully exempted from Central Excise duty. The show cause notices proposed disallowance of modvat credit availed of under Rule 57A in respect of parts of seats on the grounds inter alia that motor vehicle seats which are final products for components of motor vehicle seats, are chargeable to nil rate of duty under 94.01 read with Notification 80/90 and further the intermediate products are only those which emerge in the manufacturing stream of the products as something, which on further being processed, result in the final product in the manufacturing unit, and since motor vehicle seats were independently manufactured and did not emerge in the stream of manufacture of the motor vehicles, they could not be treated as intermediate products for motor vehicles particularly as seats were independently marketable in the open market. The appellants filed detailed replies contending inter alia that modvat credit had been rightly availed because, as far as the appellants were concerned, seats were intermediat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 754. In para 20 of the Larger Bench decision, it has been held that the specific meaning to the word manufacture" in Section 2(f) of the Act and with the law as given by the Supreme Court in the Eastend Paper Ltd. supra, the process of manufacture is complete only when the product is put in the marketable condition or commercially expedient, any process of manufacture, be it in the direct line of manufacture or anciliary one, has to be taken as the process of manufacture of the main, product, and any distinct excisable item that may come into existence, has to be taken as an intermediate product and even if that excisable product is exempt from payment of duty, vide Rule 57D, the input used therefore remains eligible to get modvat credit". In the case of Bhartia Electric Steel Company Ltd. v. CCE, Calcutta reported in 1995 (77) E.L.T. 289, the Tribunal has defined the expression intermediate goods as occurring in Rule 57D as all the products which are coming at any stage in between by different manufacturing processes between the inputs brought in by the manufacturers and the final products or by-products arising in the factory (paragraph 9). In arriving at this defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the expression job work contained in Notification 119/75 and cannot be applied in the context of Rule 57F(2)(b). Secondly, in the present case, 100% of the inputs are admittedly supplied by the appellants to the vendors for manufacture of seats and hence even accepting the interpretation of the learned SDR, they would be covered by the Rule 57F(2)(b). 7. The next point to be dealt with by us is the reliance by the Collector on Article 14 of the Constitution of India to hold that credit on seat parts in the manufacture of motor vehicles is not to be allowed. In para 36 of the order-in-original No. 61/93, dated 10-5-1993, the adjudicating authority has held that if there are two manufacturers of seats of motor vehicles (a) and (b) and (a) manufactures only motor vehicle seats and (b) manufactures motor vehicle seats along with other vehicles, (a) would not be entitled to avail modvat credit on seat part as per Rule 57C of the Central Excise Rules, as the final product for these parts, viz. motor vehicle seats, is exempted from duty. On the other hand, (b) could avail of credit if motor vehicle seats can be considered as intermediate products for motor vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the permission dated 21-7-1987 under Rule 57F(2) is not sufficient to cover the activity of sending out inputs for motor vehicle seats and getting back the seats manufactured by third parties. We find that this is neither a charge in the show cause notice nor has the Collector recorded any finding on this aspect. In any case, in the fuel tank case, the Tribunal overruled the objection of the Revenue that the appellants had not obtained the requisite permission in terms of Rule 57F(2) while construing the this very same permission dated 21-7-1987. We, therefore, hold that the appellants had obtained the requisite permission under Rule 57F(2). 10. Since the claim of the appellants is that they are covered under this Rule and we agree, we do not deem it necessary to go into the question raised by the learned SDR that neither Rule 57D nor 57 J covers the case of the appellants. 11. Next we come to the charge of non-declaration on inputs. The show cause notice contains an averment that the inputs listed in Annexure B thereto were not declared in the modvat declaration and this amounts to violation of Rule 57G of the Central Excise Rules, 1944. In reply, the appellants had denied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle code indicated in the modvat declaration has absolutely no connection with the prefix in the computer code in Annexure B to the show cause notice and to demonstrate this point, they take the example of the prefix N in the computer code and explained that this relates to new model 800 CC standard car being a sub-model of vehicle code `C for car. On the other hand, no vehicle code `N has ever been declared in the modvat declaration. 12. We have considered the submissions of both sides on this point. We accept the explanation of the appellants that the variation in part No. is a minor one and is not such as to warrant to denial of modvat credit on the ground that certain inputs were not declared in the modvat declaration, having regard to the fact that all the inputs have been described. This Tribunal has been consistently taking the view that minor variation in description is not fatal to the claim for modvat and in the present cases, since there is a minor variation in respect of part Nos. and there is no variation in the description of inputs as seen on a comparison of Annexure B to the show cause notice with the declaration filed under Rule 57G, we hold that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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