2000 (10) TMI 339

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..... ngines so manufactured are fitted into the motor vehicle manufactured in that factory and cleared on payment of duty. The reminder is cleared on payment of duty to its factory at Nasik where it is again used for fitment to motor vehicle which are cleared on payment of duty. This appellant availed of the Modvat procedure and was therefore entitled to take credit of the duty paid on the components of these engines towards the payment of duty on the engines. It had declared in the relevant documents, details of the inputs used in the manufacture of engines as well as motor vehicles, and also declared engines as intermediate product in the manufacture of motor vehicles from the components and raw materials out of which engines and other part of .....

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..... said to have been used in the manufacture of the said motor vehicle . What in effect the Commissioner says is that of the utilization of the credit taken of the duty paid on a particular input must be limited towards payment of duty on a specifically identified finished product in or in relation to which that input is used. In other words what is referred to one to one correlation between the input of the finished product is necessary. 5. We are not able to accept the argument of the Departmental Representative that the provisions of sub-rule (3) of Rule 57F, as it stood at the relevant time, give rise to the conclusion. The rule provided inter alia that credit of duty could be utilised towards payment of duty of the final product in or .....

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..... in fact the understanding of the department right from the beginning and this is the understanding which is communicated to the trade in the book Guide to Modvat by the Board in 1986, which consists of a series of question for which answers have been given. Answers to the question in question 16 is specific that there is no one to one correlation between the input used and the final product manufactured and credit may be taken as soon as the input is received. In the revised edition of the booklet in 1990, the answer to question 49 is that there is no one to one correlation of input and final product and that excess credit accumulated can be utilised towards payment of duty on final product manufactured out of non-duty paid inputs. It is th .....

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