9911796707
TMI Blog1998 (1) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... her qualities upto a point where the stress on them is greater than they have withstood, and they break or get so distorted that they cannot be put to use. After testing the remnants of these parts are cleared as scrap on payment of duty appropriate to scrap. The appellant had taken Modvat credit of the duty paid on these inputs. The department was of the view that the conversion of the parts which were tested into scrap did not take place during the course of manufacture and that therefore the benefit of sub-rule (1) of Rule 57D will not be available to these goods. Notice was issued demanding recovery of the duty equal to the credit taken. This was resisted on the ground that such testing was essential for manufacutre and that without suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rule 57F contemplates return to the factory of the goods tested for use in the finished product. He seeks to rely on two decisions cited by the appellant. 4. Sub-rule (1) of Rule 57D provided that credit allowed in respect of any inputs shall not be denied on the ground that part of the inputs is contained in any waste, refuse or product arising during manufacture of the final product. What we have to see is whether the destructive testing which results in goods being rendered non-usable for manufacture takes place during the manufacture of the final product. It was emphasized by the appellant s representative that testing was undertaken in order to ensure that the quality of the components, of which a sample was tested, was such th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words used in sub-rule (1) of Rule 57D are different from the words in Rule 57A. The latter refers to inputs which are used in or in relation to the manufacture of final products. The words used in sub-rule (1) of Rule 57D are waste etc. arising during the course of manufacture of the final product . Both this expression is wider in scope than the term during the manufacture . The term in relation to manufacture would cover a number of items which may not directly be used in the manufacture of the finished product but would contribute to such manufacture. By using the words arising during manufacture Rule 57D is restricted to such waste or by product which arises during any of the processes each of which directly is a part, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integral part of the manufacturing process. The issue for decision in Glindia Ltd. v. CCE was very similar. 6. It would be noted in these three decisions, the damage to the product was indisputably during manufacture. In Union Carbide it was before the finished product had reached the marketable stage. In the other two cases it was the containers which are without dispute necessary for packing the final product, which became scrap on the assembly line i.e. during the processes which formed part of the manufacture. In the present case the testing is clearly anterior to the manufacture. Therefore these decisions will not apply. The decisions in Hindalco industries Ltd. relates to the Modvat credit on laboratory chemicals and involves interp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
