9911796707
TMI Blog2001 (10) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 4-3-2000 issued by the Commissioner of Central Excise, Meerut-II, that during the period 1995-99, a large number of watch parts in respect of which the Modvat credit of Rs. 45,90,013/- had been availed of under the provisions of Rule 57A of the Central Excise Rules (hereinafter referred to as the 'Rules') were rejected as being defective before they were used in or in relation to the manufacture of the watches, and were reported to be destroyed without following the prescribed procedure. The Modvat credit in respect of such rejects and defective parts destroyed was not reversed in spite of directions being issued by the jurisdictional Central Excise Officers. The details were based on the appellants own records referred to as the Repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. Madhav Rao, Advocate, submitted that as per their record - RDW, the defective parts were sent from assembly line to their store and the nature of defects are indicated in such reports. It was his plea that a number of parts were got rejected during the course of manufacture of watches and such rejections on the assembly line and during the course of manufacture of watches could be considered as being wastage during the process of manufacture, for getting the benefit of Rule 57D of the Rules. He pleaded that the adjudicating authority had not appreciated the precise stage at which the disputed parts were wasted. According to the learned Advocate their case was covered under the provisions of Rule 57D of the Rules and if opportunity is gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the defects in the disputed parts were detected before their actual use in the manufacture of watches. The appellants had reported to have destroyed on their own without following the prescribed procedure, the defective parts without reversal of Modvat credit. The adjudicating authority had fully discussed the allegations including the allegation of shortages. He prayed for rejection of the appeal. 3. We have carefully considered the matter. The main issue for our consideration in this appeal is, whether the disputed watch parts in respect of which the Modvat credit had been availed of by M/s. Timex Watches Ltd. had become waste during the course of manufacturing process, or they were already defective before they could be put to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 final products or such inputs are used in the manufacture of capital goods as defined in rule 57Q and that such intermediate products or capital goods, as the case may be, 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 used within the factory of production in the manufacture of a final product (other than those cleared either to a unit in a free trade zone, or to a hundred pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f specified duty shall also not be denied or varied in case any intermediate products have come into existence during the course of manufacture of final products or the inputs are used in the manufacture of capital goods as defined in rule 57Q and such intermediate products or capital goods are not chargeable to duty of excise. 4. The Commissioner of Central Excise, Meerut-II, the adjudicating authority, had observed that any loss or wastage of the watch parts prior to putting them into use in the manufacture of the watches will not make such watch parts to be eligible for allowing credit under Rule 57D of the Rules. He held on the basis of the appellants' own records - RDW, that the parts in question were found defective and were rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider that the provisions of Rule 57D are clear and unambiguous. Only when the inputs are contained in any waste, refuse or by product arising during the manufacture of the final product or when the inputs have become waste during the course of manufacture of the final product, the provisions of Rule 57D were applicable. If the inputs are found defective and are not used in the process of manufacture of final products, the benefit of Rule 57D is not applicable to such inputs. Only when the inputs are used in the manufacture of final products and some of those inputs become waste during the course of manufacture of the final product, the credit already taken in respect of such inputs wasted was not to be denied. In the present case, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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