Tribunal grants appeal, overturns Commissioner decision on Cenvat credit eligibility for textured yarn

OLYMPIC PETRO PRODUCTS Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT-I

OLYMPIC PETRO PRODUCTS Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT-I - 2004 (170) E.L.T. 490 (Tri. - Del.) Issues:
Entitlement to Clause (b) of sub-rule (3) of Rule 57AG of the Cenvat Rules.

Analysis:

The appeal in question revolves around the issue of whether the appellant is entitled to the benefits under Clause (b) of sub-rule (3) of Rule 57AG of the Cenvat Rules. The relevant rule pertains to an independent texturiser manufacturing texturised yarn of polyesters and other goods, allowing them to take Cenvat credit of duty paid on inputs used for the manufacture of such other goods. The appellants, in this case, are engaged in manufacturing Slide Fasteners using polyester filament yarn. The duty paid on POY is availed as Cenvat credit and utilized for the manufacture of texturised yarn, which is entirely consumed captively for the production of Slide Fasteners. The Commissioner (Appeals) acknowledged these facts and accepted that the textured yarn is an intermediate product utilized for Slide Fasteners production. However, despite this, the Commissioner (Appeals) ruled against the appellant's eligibility under Clause (b) of sub-rule (3) of Rule 57AG.

The Tribunal's analysis focused on the undisputed fact that the appellants are indeed captively consuming textured yarn for the manufacturing of their final product, Slide Fasteners. Given this circumstance, the Tribunal concluded that there should be no doubt regarding the application of sub-rule 3(b) in the appellant's case. The Tribunal emphasized the critical aspect of captive consumption of textured yarn for the production process, which aligns with the provisions of the rule in question.

Ultimately, the Tribunal found the Commissioner (Appeals)'s decision denying the benefit of sub-rule 3(b) to the appellant untenable. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. This judgment underscores the importance of aligning the factual circumstances, such as captive consumption of intermediate products, with the specific provisions of the relevant rules to determine the eligibility for Cenvat credit benefits under the law.