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TMI Blog2007 (7) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... e other items which are used in or in relation to manufacture of finished goods, which are dutiable. The intermediate goods like bottom plates, splash plates etc. are eligible for exemption and have been granted exemption and hence there is no dispute about the same. However, since these goods have been exempted, the Department has denied the exemption to the hot rolled sheets, plates etc. used in the manufacture of such exempted goods. The appellants are claiming exemption in respect of such impugned goods under Notification 67/95 on the ground that the exempted goods being intermediate goods, the proviso under the said Notification has no applicability since the finished goods are dutiable. 3. In some of the cases, the appellants are using iron and steel products produced by them for manufacture of castings. These castings are meant for manufacture of machine parts which are used for replacement of worn out parts of machineries which are used for production of dutiable finished goods. In some of the cases, the appellants have used some iron and steel products directly for manufacture of machine parts. In all such cases, there is no dispute regarding the exemption to such machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants have not complied with the rules and/or have not produced the necessary documentary evidence. 10. The ld. Advocate for the appellants has cited the following decisions in support of the appellants' claim for exemption under Notification 67/95 and claim for entitlement to Modvat credit in respect of the impugned goods involved in these appeals: (i) Collector of Central Excise, New Delhi v. Hindustan Sanitaryware & Industries - 2002 (145) E.L.T. 3 (S. C.) : In this case, the Hon'ble Supreme Court has allowed exemption to plaster of paris used in making of moulds which are in turn used as inputs in relation to manufacture of sanitaryware (final product); (ii) Escorts Ltd. v. Commissioner of Central Excise, Delhi - 2004 (171) E.L.T. 145 (S.C.) : In this case, the Hon'ble Supreme Court has held that the purpose of Central Excise Rules & Cenvat Rules is to streamline payment of duty and to prevent cascading effect of duty if levied both on inputs and final products and has held that since the tractor parts are intermediate goods used for manufacture of tractors which are dutiable finished goods, the exemption is available on the inputs even though the tractor parts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally connected with the manufacture. Consequently, the Larger Bench has held that such gases and welding electrode cannot be considered to have been used for the manufacture of final product and hence these have been held not eligible for input duty credit. 13. After hearing both sides extensively on the issues involved in these appeals, we are of the view that since the decision of the Larger Bench in the case of Jaypee Rewa Plant (cited above) has not been appealed against or reversed, the impugned goods namely, welding electrodes, formatic flux, welding alloys, welding flux, welding wires etc. and gases which are used for repair and maintenance of machinery cannot be allowed Modvat credit. However, the ld. Advocate for the appellants states that in some of the cases, the appellants have used oxygen and acetylene gas for actual cutting of slabs etc. and such use is different from use of gases for welding, repairing and maintenance of machinery. Hence, he contends that where the impugned gases have been used for such processes integrally connected with the manufacture of final product, the exemption should be allowed. We find that the reasoning advanced by the ld. Counsel is acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Hindustan Sanitaryware (cited supra) allowed exemption to plaster of paris used for making of moulds which were used in turn in relation to the dutiable sanitaryware. We also find that the said decision has been followed by the Tribunal in several other cases noted above. The machine parts manufactured by the appellants within the factory either out of the inputs manufactured by them or procured by them from outside are on the same footing as the moulds made from plaster of paris in the case of Hindustan Sanitaryware and hence the ratio of the said decision of the Hon'ble Supreme Court would permit exemption to the impugned inputs manufactured and used by the appellants under Notification 67/95 and would permit credit under the Modvat Rules when brought from out side. 17. In some of the appeals, credit has been denied on items, such as refractory and lubricating oil etc. on the ground that the declaration was filed under Rule 57A and not under Rule 57Q in some cases and it was the reverse in some other cases. In some of the cases, the Modvat credit has not been allowed on the ground that the items in question were not declared at the material time. These minor irreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. 21. In view of our findings and determination as above, the impugned orders to the extent of denying the credit on welding electrodes, gases, flux etc. used in welding, repair and maintenance etc. are confirmed and the impugned orders denying credit on inputs used for the manufacture of intermediate machine parts are set aside. The impugned orders denying exemption under Notification 67/95 to the inputs manufactured and used in the intermediate machine parts are set aside. The impugned orders denying credit to sulphuric acid, refractories, lubricating oil, graphite electrodes, etc. are set aside. The credit on paints and varnishes are allowed with effect from 1-3-97 and denied for the period prior to that date. As regards oxygen and acetylene gases used in the manufacture of dutiable finished goods (excluding these used in welding, repairing and maintenance), the matter is remanded to the original authority for passing a fresh order in the light of our observations above and after taking into account documentary evidences to be produced by the appellants. The denial of credit on other miscellaneous grounds dealt in paragraph 20 above is confirmed. 22. In the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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