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TMI Blog1998 (12) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... arn. During December, 1994 the respondents availed an amount of Rs. 44,238/- as Modvat credit duty paid on the following goods :- (a) ERM cleaner - Spare parts of blow room machinery. (b) TVR 425 - Spare parts of blow room machinery. (c) Weighing machine. (d) Spindle tapes. 3. It is the case of the department that cellulose and non-cellulose during the material time they were manufacturing only cotton yarn. During the course of manufacture of cotton yarn, cotton carded/combed emerges as an intermediate product and which attracts `Nil rate of duty. It was not specified as final product as annexure to Rule 57Q(1). The department further contends that the credit of duty on TVR 425 and the Weighing Machine were availed on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. These are two units which are commercially engaged in spinning yarn. They have not felt the need for a carding/combing machine as they can buy the product from other known sources. This evidence clearly satisfies the law as laid down in the case laws of M/s Bhor Industries, Moti Laminates and Indian Textile Paper Tube Co. (supra). The respondents have, not led any evidence to the contrary, because mere expert or technical opinion of SITRA/CEMA is superceded here by actual marketability to such an extent that two units engaged in manufacture of yarn just do not consider it necessary to install carding/combing in-house facility. It is not disputed that carded/combed cotton is an essential stage in spinning of yarn and that yarn cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it : 4. Since we were a new Unit, we were not able to get the Polyester Stapple Fibre from the manufacturers of the said commodity as they made their supplies only to their regular customers. After quite some efforts, we were able to get fibre supply only during April 1995 and from then onwards, we were manufacturing non-cellulosic spun yarn continuously, putting the modvatted machines into use. 5. It is natural that the machines cannot be left idle and it was used for a short while in the manufacture of dutiable cotton yarn till we got the Polyester Stapple Fibre supplies. There is no provision in law that the machinery should be simultaneously used in the manufacture. Once the machines are started to be used, it will be in use for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as to when the raw material was obtained and when the final product was made. If that were to be so, the respective RT 12 Returns ought to have been filed before me, they have not been filed before me. Therefore, the respondent has failed in his submissions. 10. As far as the granting of credit on the basis of Custom House copy is concerned, I think the department s contention is not correct. As long as the input have come and utilised in the manufacture of the final product, the ultimate object of executing the fact of taxation should be avoided in terms of Modvat credit. Hence, the contention of the department is rejected on the whole. 11. The appeal of the department viz., Modvat credit on ERM cleaner and TVR 425 is accepted. Mod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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