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TMI Blog2004 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of tractors on which duty is paid. We clarify that in respect of parts which are sold in the open market and/or used for manufacture of tractors on which no duty is paid, the benefit of the Notification No. 217/86-C.E., dated 2nd April, 1986 may not be available. Appeal allowed. - 6909-6912 of 2003 - - - Dated:- 25-8-2004 - S.N. Variava and G.P. Mathur, JJ. [Judgment per : S.N. Variava, J.]. - These Appeals are against the Judgment dated 17th March, 2003 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (for short CEGAT). 2. Briefly stated the facts are as follows : The Appellants are manufacturer of tractors. They Modvat credit in respect of duties paid on inputs used in the manufacture of parts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "final products", as the Central Government may, by notification in the Official Gazette, specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the "special duty") paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the "inputs") and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he inputs have become waste in or in relation to the manufacture of the final product, whether or not such waste, refuse or by-product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty or is not specified as a final product under rule 57A. (2) Credit of specified duty allowed in respect of any inputs shall not be denied or varied on the ground that any intermediate products have come into existence during the course of manufacture of the final product and that such intermediate products are for the time being exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty : Provided that such intermediate products are - (a) used within the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her to a unit in a Free Trade Zone or to a 100% Export Oriented Unit), which are exempt from the whole of the duty of excise leviable thereon or are chargeable to "Nil" rate of duty : Provided further that where such use of inputs is in a factory of a manufacturer, different from his factory where the goods have been produced, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the Central Excise Rules, 1944. THE TABLE S. No. Description of inputs Description of final products (1) (2) (3) 1. Goods classifiable under any headings of chapters 2, 3, 4, 5, 7, 8, 9, 11, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the parts the final product. It is not denied that the parts, which are manufactured from the duty paid inputs, are used in the manufacture of tractors and that the duty is being paid on the tractors. 7. Mr. Lakshmikumaran very fairly conceded that in cases where the parts are cleared for sale in the open market or in cases where the parts are used for manufacture of small tractors, on which no duty is paid, the Appellants do not and have not claimed any Modvat credit. He states and it is not denied that in respect of such parts separate registers have been maintained. 8. It is to be seen that the whole purpose of the Notification and the Rules is to streamline the process of payment of duty and to prevent the cascading effect if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not paid on the intermediate product would not disentitle the manufacturer from the benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. In that case, the input was plaster of paris, the intermediate product was moulds made out of the plaster of paris, the final product was sanitaryware. In our view, the facts of that case are identical to the facts of the present case. The ratio laid down therein fully applies to this case. 11. In this view of the matter, we set aside the impugned Judgment and the Order of the Commissioner of Central Excise. It is held that the Appellants will be entitled to Modvat credit on duties paid for the inputs used for manufacture of parts, so long as the parts are used in the manufacture of tractors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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