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TMI Blog1997 (12) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... rds payment of duty on declared output. In respect of moped chains which were exported they could not utilise that the full credit and therefore, they utilised a part of it for payment of duty on waste and scrap generated during the manufacture of cycle chains which were cleared for home consumption. 4. The Department considered that in terms of Rule 57F(4) read with Proviso 1 thereof such availment of credit was not permissible and therefore, the A.C. directed reversal of credit and also imposed penalty. 5. The Commissioner confirmed the order regarding denial of Modvat credit and waived the penalty. 6. It was their submission that their action was fully covered by Rule 57F(4) and Proviso 1 relied upon by the Department w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same both for moped chains and the cycle chains but moped chains were dutiable and therefore, were declared as the final product and the credit was still left in balance because some quantity was exported. The cycle chains made from the same inputs were not so declared as the Modvat could not be claimed in respect of the cycle chains exempt from duty during the relevant period. However, it is the waste generated during the process of such manufacture which became dutiable and the credit on the inputs lying in balance was utilised for payment of duty at the time of clearance. It was also his submission that the observations made during the course of passing the stay order may also be taken into account and in this respect, he would draw at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty (as such Modvat credit earned will lapse). Therefore, show cause notices were issued for the periods 3/1994 to 7/1994, 8/1994 to 11/1994 and 12/1994 to 2/1995 separately. After following the procedure of adjudication, the D.C. observed that the appellants had also not declared scrap as final product in their Modvat declaration filed under Rule 57G of Central Excise Rules, 1944. He also observed that in the instant case, the final product i.e. moped chains on which Modvat credit had been taken and utilised towards the clearances of scrap generated during the course of manufacture of cycle chains is not the similar final product as envisaged under Rule 57F(4) [appears to have been inadvertently mentioned as 57G(4)] of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction that in the case of Rule 57F(4), the words "any inputs" in the sentence "Credit of specified duty allowed in respect of any inputs may be utilised towards payment of duty of excise" are important and a comparison between sub-clauses (i) and (ii) shows that only sub-clause (i) refers to the inputs intended to be used in accordance with declaration filed under sub-rule (i) of Rule 57G but sub-clause (ii) does not use these words and allows the aforesaid utilisation "on the waste, if any, arising in the course of manufacture of the final products". Similarly, in the case of Rule 57F(5), the relevant words used are "Any waste, arising from the processing of inputs, in respect of which credit has been taken may - (a) be removed on payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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