Customs, Excise and Gold Tribunal - Mumbai
Tata Oil Mills Co. Ltd. vs Commissioner Of Central Excise on 18 May, 1998
Equivalent citations: 1998(102)ELT103(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. This is an appeal filed by the appellants against the decision of Collector (Appeals) made in GS/1155/BI/92, dated 12-8-1993 whereunder he held that the appellant company was not eligible for Modvat credit for the inputs used in the manufacture of vegetable non essential oil which was further used in the manufacture of soaps.
2. The appellants were manufacturers among other goods vegetable oil and soaps falling under Chapters 15 and 35 of the Central Excise Tariff. They were using vegetable oils and other inputs for the manufacture of soaps for which they claimed Modvat credit of duty paid thereon after filing necessary declarations as required under 57G(1). In the said declaration they have declared various chemicals as well as vegetable oils as inputs instead of soap. The copies of various declarations dated 29th February and 12th March, 1990 were filed before the assessing authority. The Assistant Collector rejected the claim holding that the claim of the party regarding Rule 57D(2) could not be acceptable because the said rule covers only intermediate products which comes in the existence during the manufacture of the final product. Since VNE oil is exempted in terms of Notification 17/91 they could not claim Modvat credit. The Collector (Appeals) when an appeal was filed has held as follows :
"However the question here is whether the oil is an intermediate product or emerges at the intermediate stage. In other words the appellant company set out to manufacture oil and thereafter used the Vegetable Non Essential Oil so manufactured to manufacture soaps. Hence the Assistant Collector's view that the Vegetable Non Essential Oil was not an intermediate product has not been successfully assailed."
3. He also held that having filed two separate declarations one for vegetable oil and the other for manufacture of soap each independent of the other and it was not a continuous process. Hence he dismissed the appeal.
4. Shri Arun Mehta the ld. Advocate stated that the finding of the Collector (Appeals) is absolutely wrong in law. He stated that he has filed declarations under Rule 57G regarding manufacture of vegetable oil as well as manufacture of soaps. He invited my attention to the said declarations which states that as far as soap is concerned vegetable oils is one of the inputs. As far as final product vegetable oil is concerned the inputs which are used in the manufacture of vegetable oil has been specifically stated. He stated that the finding of the Collector that it should be a continuous process namely the inputs which manufacture vegetable oil and the vegetable oil with the help of the other chemicals manufacturing soap is absolutely wrong. He cites the decision of the Madras High Court in the case of Ponds India Ltd. v. CCE -1993 (63) E.L.T. page 33. He specifically invited my attention to paragraphs 20 and 24 which assailed grounds taken by the Assistant Collector. The approach of the Commissioner in my view is wrong in law. He held as stated above that manufacture of vegetable oil is separate and distinct. The input vegetable oil and the final output namely vegetable oil has been utilised in the manufacture of final product namely soap. This fact has never been arisen in the orders passed by both Assistant Collector as well as the Collector (Appeals). The fact whether they are both products namely vegetable oil and soap are manufactured independently does not matter. As long as vegetable oil has been utilised in the manufacture of final product in my view Modvat credit cannot be denied. Hence I uphold the appeal of the appellants.
5. Appeal allowed setting aside the order passed by the Collector (Appeals). Consequential relief if any.