Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise, Indore vs Surya Roshni on 8 March, 2002
Equivalent citations: 2002(143)ELT124(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. Revenue has filed this appeal assailing the order passed by the Commissioner (Appeals). Ld. Commissioner (Appeals) held that the nature of the manufacturing activity is such that a large portion of the inputs are rendered as scraps and waste and this fact has been recognised by specifying them as final products in the table annexed to Notification No. 5/94-CE. (N.T.) dt. 1-3-94; that this aspect has not been commented upon either because it has been overlooked and the appellants did not want to contest it because it forms part of a Govt. of India Notification; that since these goods have been specified as final products and arc cleared on payment of duty, there is no reason why the appellants cannot take Mod vat credit on inputs which have gone into their manufacture.
2. The facts of the case briefly stated are that the respondents herein are engaged in the manufacture of Fluorescent Tube Light, Tungsten Halogen Lamps and Class Bulbs. The appellants also opted for availing Modvat credit facility under Rule 57A of Central Excise Rules, 1944. During the scrutiny of their R.T.I2 returns for the months of Sept. 1994 to Aug. 1996, it was observed that the appellant had taken Modvat credit of duty paid on GLS, Glass Shells and Aluminium GLS Cans used in the manufacture of final product namely vacuum and gas filled electric bulbs which are cleared at 'Nil' rate of duty under Notification No. 46/94, dt. 3-9-94. Accordingly, a SCN was issued to the respondents asking them to explain as to why the Modvat credit taken and utilised by them should not be disallowed and recovered from them under Rule 57-1. The Addl. Commissioner disallowed Modvat credit and imposed the penalty of Rs. 10,000/-. The appellants filed an appeal before the Commissioner (Appeals) who held as indicated above.
3. Arguing the case for the Revenue Shri D.N. Choudhary, Ld. DR submits that in the instant case gas filled bulbs were the final product and not the waste which the respondent cleared on payment of duty. He submits that since the final product i.e. gas filled bulbs are exempt, therefore, in terms of Rule 57C, the respondents were not eligible to avail Modvat credit on inputs. Ld. DR submits that final product has been defined under Rule 57A. He submits that in this case the final product is gas filled bulb and not waste which was cleared on payment of duty. He, therefore, submits that embargo under Rule 57C shall be applicable in this case and therefore, he submits that Commissioner (Appeals) has incorrectly allowed the appeal of the respondent herein. Ld. DR, therefore, prays that the impugned order may be set aside and the appeal filed by Revenue may be allowed.
4. Arguing the case for the respondent Shri A.R. Madhav Rao, ld. Counsel submits that Central Board of Excise & Customs under their letter F. No. 345/2/2000-TRU, dt. 29-8-2000 in para 6 clarified :
"6. Some references have been received seeking clarification whether Cen-vat credit can be utilised for payment of duty on waste and scrap. The answer to this query lies in the affirmative for the simple reason that waste and scrap are "final products" within the definition under Rule 57AA(c)".
Ld. Counsel submits that this clarification is no doubt given in respect of Cenvat. However, this equally is applicable to Modvat credit. He refers to the decision of this Tribunal in the case of Rolls Tubes Ltd. v. CCE, Allahabad contained in Tribunal's Final Order No. A/62/02/NB, dt. 4-12-01. He submits that in this case the Tribunal held in para 5 as under :
"5. The waste and scrap, which were lying in stock as on 9-3-94, were "final products" within the meaning of this term under Rule 58H. The CR Sheets (Inputs) covered by valid duty-paying documents were used for the manufacture of such waste and scrap. The duty-paid nature of the CR Sheets is not in dispute. Rule 57H permitted the appellants to avail Modvat credit of the duty paid on the inputs used in the manufacture of the waste and scrap which were lying in stock as on the date (9-3-94) on which they filed the Rule 57G declaration. The assessee satisfied all the conditions for the input-credit. Therefore, the credit in question was admissible to them. The order of the Commissioner (Appeals) cannot be sustained. I set aside that order and allow the appeal with consequential relief to the appellants".
Ld. Counsel, therefore, prays that the impugned order may be upheld and the appeal may be rejected.
5. We have heard the rival submissions. In the instant case the admitted position is that gas filled glass bulbs are manufactured and in themanufacture of gas filled bulbs waste is generated, this waste is cleared by the respondent herein on payment of duty. The respondent availed proportionate Modvat credit on inputs. Therefore, a question arose as to whether Modvat credit could be availed on the waste generated in the process of manufacture of gas filled bulbs. No doubt waste arising in the process of manufacture of gas filled bulbs is a specified item under Rule 57A. The contention of the Revenue was that since final product was gas filled bulbs and since gas filled bulbs carried Nil rate of duty, therefore, Modvat credit could not be taken by the respondent who cleared the waste on payment of duty. The thrust of the arguments of the Revenue was that if the final product which is gas filled bulbs in the instant case carried nil rate of duty then Modvat credit cannot be claimed and taken by the respondent even if they were paying duty on waste. We note that waste is the specified product. For purpose of taking Modvat credit, waste which is the specified product is final product and since waste is a final product on which duty is paid by the respondent herein held that they will be eligible to take proportionate Modvat credit and utilise the same for purpose of payment of duty on waste. This view is supported by the clarification given by the CBEC referred to above. Though that clarification has been given in respect of Cenvat credit however, in terms of the other decision cited by the respondent, the clarification will be equally applicable to Modvat.
6. Having regard to the above findings, we do not find any merit in the appeal filed by Revenue. The appeal is, therefore, rejected.