Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise And ... vs Reliance Industries Ltd. on 15 October, 2003
ORDER Gowri Shatikar, Member (T)
1. Each of the respondents to these appeals was engaged in the manufacture of excisable goods, part of which it cleared without payment of duty in terms of notification 217/86 to another factory owned by it, in which such goods were used in the manufacture of excisable goods which were cleared on payment of duty. The assessees had availed of the modvat credit facility and taken credit of the duty paid on inputs, used in the manufacture of goods which were cleared to the other factory for further utilisation therein. The question for consideration in this appeal is whether they were required to reverse the modvat credit of this inputs as were cleared from the factory without payment of duty. In the two orders impugned in these appeals, the Commissioner (Appeals) relying upon the decision of the Tribunal in Bajaj Tempo Ltd v. CCE 1994 (69) ELT 122 held that there was no such requirement and allowed their appeals against the order of the adjudicating authority denying credit. Hence these appeals by the Commissioner.
2. The contention in the department's appeal is that by applying the provisions of Rule 57C no credit can be taken upon inputs used in the manufacture of exempted goods and therefore the credit ought to have reversed. The departmental representative also relies upon the decision of the larger bench of the Tribunal in Kirloskar Oil Engine v. CCE 1994 (73) ELT 835 and contends that the decision in Bajaj Tempo is pending before the Bombay High Court on an application made under Section 35G of the Act.
3. In the decision in Bajaj Tempo v. CCE the Tribunal had concluded that the notification 217/86 could not be treated on a par with other notification issued under Rule 8 of the Central Excise Rules. It was issued in pursuance of the modvat scheme. Its object was to avoid a situation in which a manufacturer has to first avail of the modvat credit on inputs used in manufacturing a product, which he clears it on payment of duty by using that credit and sends it to another factory for use in manufacture of other goods where again the same process is repeated. It said that the object of the notification was to avoid such unnecessary work to the assessee, resulting in no benefit to the revenue and to ensure the same result. It also noted that the words employed to describe the goods "input" "intermediate product" etc. were also employed in rules relating to modvat and the scope of the notification was co-extensive with that of the modvat scheme.
4. In Kirloskar Oil Engines v. CCE 1994 (73) ELT 835, the question that was referred to the larger bench of the Tribunal was whether the modvat credit of duty paid on inputs used in the manufacture of the declared final product cleared without payment of duty in terms of exemption notification was required to be disallowed in terms of Rule 57C. The matter had been referred to the larger bench by the Bombay bench in its order reported in 1993 (67) ELT 412. In its decision in Bajaj Tempo the Bombay bench of the Tribunal (incidentally comprising the same members) had taken note of its referring order in Kirloskar Oil Engines. It noted that notification 217/85 which is what Kirloskar was concerned with was not on par with notification 217/86 and unlike the latter, not perceived to be issued so as to advance the scheme of modvat in consonance with it. We do not find anything from the argument of the departmental representative which impels us to ignore the distinction made by the bench which both referred Kirloskar Oil Engine to the larger bench and propounded the view as expressed in Bajaj Tempo. In this situation, we find no ground to differ with Bajaj Tempo and therefore to interfere with the order of the Commissioner (Appeals). We also note that the ratio of Bajaj Tempo has been applied by a number of benches of this Tribunal.
5. Appeals dismissed.