2002 (2) TMI 255 - AT - Central Excise

Modvat credit allowed for furnace oil used in manufacturing wire rods cleared without duty payment

The Tribunal held that Modvat credit on furnace oil used in manufacturing wire rods cleared without duty payment is admissible, citing exceptions under ... Modvat/Cenvat - Modvat on inputs Issues Involved: The issue involves the admissibility of Modvat credit on furnace oil used in the manufacture of wire rods cleared without payment of duty under Rule 57F(4) of the Central Excise Rules, 1944.Details of the Judgment:Issue 1: Admissibility of Modvat CreditThe appellants were issued a show cause notice alleging that they availed Modvat credit on furnace oil used in the manufacture of wire rods cleared without duty payment, violating Rules 57A, 57C, 57G, 57F, and 173Q of the Central Excise Rules, 1944. The Asstt. Commissioner confirmed a duty amount and imposed a penalty, which was upheld by the Commissioner (Appeals).Issue 2: Appeal Against Impugned OrderThe appeal against the Commissioner (Appeals) order was heard by the Appellate Tribunal. The appellants argued that since they clear a part of the final product on duty payment, the Modvat credit on fuel used in manufacturing the exempted products should not be denied under Rule 57C(1). They contended that the specific exceptions for fuel under Rule 57C(2) and Rule 57CC(1) exempt them from reversing Modvat credit.JudgmentThe Tribunal considered the specific provisions of the Modvat rules and concluded that no Modvat credit reversal is required for inputs used as fuel in the manufacture of final products cleared without duty payment. The Tribunal found that the rules create exceptions for fuel inputs, exempting them from credit reversal or payment of 8% of the price of exempted goods. Consequently, the impugned order was set aside, and the appeal was allowed.