1995 (1) TMI 218 - AT - Central Excise

Appellate Tribunal grants relief on pre-deposit for duty & penalty, citing Rule 57D(2)

The Appellate Tribunal allowed the appellants' application seeking dispensation of pre-deposit of duty and penalty imposed under the impugned order. It ... Modvat credit - Intermediate goods Issues:1. Dispensation of pre-deposit of duty and penalty under the impugned order.2. Interpretation of Rule 57D(2) regarding intermediate products.3. Consideration of PVC ink as an intermediate product for MODVAT credit.4. Applicability of the ruling of the Madras High Court in the case of Pond's India.5. Reconsideration of the matter in light of the High Court ruling.6. Admissibility of input credit for plastic granules used in manufacturing.Analysis:1. The case involved an application seeking dispensation of pre-deposit of duty and penalty imposed on the appellants under the impugned order. The duty demanded and penalty imposed were contested based on the use of inputs for manufacturing PVC inks and PVC sheetings, sheet, film, foil, falling under different sub-headings.2. The interpretation of Rule 57D(2) regarding intermediate products was crucial in determining the eligibility for MODVAT credit. The rule stipulates that the credit on duty allowed in respect of any inputs shall not be denied if intermediate products emerge during the manufacturing process of the final product. The dispute centered around whether PVC ink qualified as an intermediate product under this rule.3. The appellants argued that PVC ink should be considered as an intermediate product since it is used in printing PVC sheetings, sheet, film, etc., which are the final products. They contended that the duty paid on the input used for PVC inks should be allowed as credit for the final products. The lower appellate authority and the Department disagreed, leading to the appeal.4. The Department cited the ruling of the Madras High Court in the case of Pond's India, suggesting its applicability to the appellants' case. The judgment in the Pond's India case was deemed relevant in determining the eligibility for MODVAT credit and the classification of products as intermediate or final.5. The Appellate Tribunal referred to the ruling of the Hon'ble High Court of Madras in the Pond's India case, which held that input credit for certain products was admissible. The Tribunal found merit in the appellants' arguments and allowed their prayer for dispensation of duty and penalty, remanding the matter for reconsideration in light of the High Court ruling.6. In line with the High Court's decision on the admissibility of input credit for specific products, the Appellate Tribunal set aside the lower appellate authority's order and remanded the matter for further consideration. The ruling emphasized affording a reasonable opportunity for the appellants to present their case, aligning with the principles of natural justice and legal procedure.