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TMI Blog2002 (12) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... input fuel which is used for manufacture of dead burnt magnetise, an intermediate product which is actually used within the factory for manufacture of ramming mass and mixes falling under chapter heading 38 as dutiable final product had not been denied with credit of duty. However, the quantum of furnace oil used as fuel in the manufacture of dead burnt magnesite which is an intermediate product and sold as such to the customers without payment of duty has been denied with the modvat credit on the ground that Sub-rule (2) of Rule 57C has set out a procedure that a manufacture has to follow, where he is engaged in the manufacture of any final product which is chargeable to duty as well as in the manufacture of any final product which is not chargeable to duty in the same factory. It is held by the Commissioner (Appeals) that the procedure is that the manufacturer has to follow the provisions of either Sub-rule (1) of Rule 57CC or the provisions of Sub-rule (9) of that rule in order to comply with the provisions of Sub-rule (1) of Rule 57C. Although, he has noted that in respect of inputs used as fuel in the manufacture of exempted as well as dutiable products, they are excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as it is excluded under Rules 57C and 57CC although the processed inputs are cleared to the principal manufacturer without payment of duty. 5. Ld. SDR attempted to distinguish the judgments on the ground that the final product cleared to customers is exempt from duty and hence will not get the benefit of modvat credit as held by the Commissioner and the lower authority. She argued that dead burnt magnesite when it was removed within the factory as an intermediate product would be entitled to benefit of modvat credit but not when it is removed from the factory as it assumes the characteristics of a final product. 6. Ld. Counsel in reply contended that the intermediate product continues to remain as an intermediate product and would not become a final product as it is not considered as a final product in the manner in which any final product is understood. So long as the inputs fuel was utilized for a common product with the same process of manufacture and it is not known as to whether the intermediate product, dead burnt magnetise is used within the factory or sold; therefore, the intention of the Government was to exclude fuel itself from the provisions of Rule 57C and gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for dead burnt magnesite, which is an intermediate product carrying NIL rate of duty, which was sold to the customers solely on the ground that it is a final product and in terms of Rule 57C the intermediate product which is exempt from duty is not eligible for benefit of modvat credit. On this aspect of the matter, this Bench recalled the stay order directing the appellant to deposit the entire amount and granted full waiver in terms of Misc. order No. 135/2002 dated 21.5.2002 on the ground the issue is totally covered by the judgment rendered by North Regional Bench in the case of Indore Steel Iron Mills Ltd. v. CCE Indore (supra). The findings recorded in the said order in para-6 was relied. The said paragraph is reproduced herein below: 6. I have carefully considered the submissions made before me by both the sides. Since there are specific provisions in the modvat rules on the issue, legally one is obliged to refer to them and find the solution to the problem, rather than rely on the general provisions. The appellants are availing modvat credit on the use of furnace oil as fuel in their factory. They are manufacturing wire rods from billets. A part of the wire rods is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of the manufacture of sugar and molasses and bagasse is chargeable to nil rate of duty. It was noticed that provision of Sub-rule (1) of Rule 57CC excludes provision of Rule 57CC for application to both intermediate as well as to dutiable goods. 12. We notice that dead burnt magnesite is an intermediate product which is cleared as intermediate product only and not as a final product. It cannot be considered as final product at all as held by the department. As the process of manufacture disclosed that it continues to remain as an intermediate product, when it is used for manufacture of final product falling under chapter heading 38 which is dutiable product, therefore the judgment cited is clearly applicable to the facts of the present case and hence the impugned order is set aside and appeal allowed. 13. In the case of M/s. Tata Refractories Ltd. in Appeal E/386/2002, the only ground for rejecting the claim of the modvat credit is that the item is removed to another main plant on stock transfer basis. It is clear that there is no sale in the present case and what was transferred was only stock transfer basis to their main unit. In an identical situation in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The crucial words are which we have already extracted, namely the final products which are charged by the manufacturer for the sale of such goods at the time of their clearance from the factory. Here it is admitted position that the goods have been shifted or transferred from one of its units at Ballarpur to Ashti unit. The case of the Department is the pulp has been sold by its Sewa unit. Therefore, they are taking similar goods concept for the purpose of taxation here. The crucial words here is according to us the price for the sale of such goods. Here there is no sale because the word sale contemplates existence of two independent legal entities. Here the transaction involved is shifting of certain goods from one of its unit to other unit. There is no existence of transfer of property in the goods among two independent legal entities. Without this there cannot be any sale. To repeat sale involves transfer of property in the goods from one person to another. The principle of which or the basis on which the Department has proceeded in this case is not based on law. If as suggested and argued by the departmental representative, we follow the argument, then, it will amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred to the depots, the reversal of credit under Rule 57CC stall have to be deferred till the sale is effected from the depot and the price is known. This makes the position clear that no reversal is required when there is no sale either from the factory gate or from the depot or from the consignment agent's premises etc. 9. In case cited before us, in the case of Commissioner of Income-tax v. Elphinstone Spinning and Weaving Mills, 1960 (40) ITR 142B, the Supreme Court has held as follows: There is no doubt that if the words of a taxing statute fail, then so must the tax. The courts cannot, except rarely and in clear cases, help the draftsmen by a favourable construction. Here, the difficulty is not one of inaccurate language only. It is really this that a very large number of tax-payers are within the words but some of them are not. Whether the enactment might fail in the former case on some other ground (as has happened in another case decided today) is not a matter we are dealing with at the moment. It is sufficient to say here that the words do not take in the modifications which the learned counsel for the appellant suggests. 10. The above judgment comes on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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