1998 (5) TMI 418 - AT - Indian Laws

Tribunal: Gravure Printing Cylinders as Intermediate Products for Modvat Credit

The Tribunal determined that Gravure Printing Cylinders (GPCs) are intermediate products in the manufacturing process of printed laminated plastic film, ... Intermediate product - captively used - Modvat credit admissibility - exemption under Notification No. 67/91 - application of Rule 57C - application of Rule 57D(2) - final product versus intermediate product distinctionIntermediate product - captively used - exemption under Notification No. 67/91 - Modvat credit admissibility - application of Rule 57C - application of Rule 57D(2) - final product versus intermediate product distinction - Whether Gravure Printing Cylinders (GP Cylinders) captively used for printing laminated plastic film are intermediate products and whether duty-paid inputs used in their manufacture are admissible to Modvat credit. - HELD THAT: - The Tribunal found as an admitted fact that GP Cylinders are manufactured by the appellants and in a major part consumed captively. Although captively used GP Cylinders are exempt under Notification No. 67/91, the court examined whether that exemption alone precludes Modvat credit on inputs used in their manufacture. Relying on the Larger Bench decision in Rama Krishna Industry, the Tribunal held that items which come into existence in the course of manufacture and are used in producing the final commodity may be intermediate products even if exempt when sold. Rule 57C alone does not determine credit where goods are intermediate; Rule 57D(2) governs admissibility of Modvat credit in such cases. The Tribunal rejected earlier contrary precedents (Shivaji Works Ltd. and Mysore Kirloskar Ltd.) to the extent they treated analogous items as not intermediate. It further accepted that a product may be a final product for one trade yet an intermediate product for another; accordingly, where GP Cylinders are captively used in the printing of laminated plastic film they function as intermediate products and inputs used in their manufacture are eligible for Modvat credit under Rule 57D(2). [Paras 4, 5]GP Cylinders captively used in the manufacture of printed laminated plastic film are intermediate products and the duty paid on inputs used in their manufacture is admissible to Modvat credit under Rule 57D(2); appeals rejected.Final Conclusion: The impugned order upholding entitlement to Modvat credit on inputs used in the manufacture of GP Cylinders (when those cylinders are captively used as intermediate products in producing printed laminated plastic film) is affirmed and the appeals are dismissed. Issues:Determining whether Gravure Printing Cylinders used for printing laminated plastic film are intermediate products in the manufacturing process and whether the inputs used in their production are eligible for Modvat credit.Analysis:The main issue in this case revolves around the classification of Gravure Printing Cylinders (GPC) as intermediate products in the manufacturing process of printed laminated plastic film and the admissibility of Modvat credit for the inputs used in their production. The appellant argues that GPCs are captively used in the manufacture of printed laminated plastic film and are exempt under Notification No. 67/91, thus disallowing Modvat credit for inputs used in their production. Reference is made to previous Tribunal decisions regarding the treatment of sand moulds as non-intermediate products to support this argument.On the other hand, the respondents contend that previous Tribunal decisions regarding the classification of sand moulds as intermediate goods are no longer applicable, citing the Rama Krishna Ind. case where sand moulds were considered intermediate products. They also refer to a judgment by the Madras High Court to support their argument. The respondents argue that GPCs can be considered intermediate products based on various legal interpretations and precedents, making the duty paid on inputs used in their manufacture eligible for Modvat credit.The Tribunal, after considering the arguments presented by both sides, notes that GPCs are manufactured by the appellants and are primarily consumed captively. Drawing parallels with the treatment of sand moulds as intermediate products in a previous case, the Tribunal concludes that GPCs, when captively used in the manufacturing process, should be considered intermediate products. Therefore, the duty paid on inputs used in the manufacture of GPCs is deemed admissible for Modvat credit under Rule 57D(2). The Tribunal upholds the impugned order and rejects the appeals based on this analysis.In conclusion, the judgment clarifies the classification of Gravure Printing Cylinders as intermediate products in the manufacturing process, making the duty paid on inputs used in their production eligible for Modvat credit. The decision is based on legal interpretations, precedents, and the specific circumstances of the case, ultimately favoring the respondents' position.