1996 (11) TMI 187 - AT - Central Excise

Tribunal grants appeal, upholds Modvat credit for inputs cleared for testing without duty payment.

The Tribunal allowed the appeal, ruling in favor of the appellants. The delay in filing the appeal was deemed condoned, and Modvat credit on inputs ... Appeal - Condonation of delay - Modvat credit Issues:1. Condonation of delay in filing the appeal.2. Merits of the case regarding Modvat credit on inputs contained in samples of pipes cleared for testing without duty payment.Condonation of Delay:The appeal arose from an Order-in-Appeal confirming a demand under Rule 57(i) by the Collector. The appellants requested condonation of delay in filing the appeal, citing dispatch of appeal papers via speed post before the expiry date. The delay was marginal, and they argued that the appeal reached the Collector within the limitation period. The Collector rejected the appeal as time-barred but proceeded to decide on merits. The Tribunal held that the delay was not significant, as evidenced by the speed post acknowledgment receipt, and that the Collector had implicitly condoned the delay by considering the appeal on merits.Merits of the Case:The appellants contended that the samples drawn for testing were exempt under Rule 57C, as they were part of the production process and not waste. The Collector, however, held that the samples were not independent of the finished products and were not waste. The Tribunal analyzed previous judgments, including one involving cement products and another on dry cell batteries, to establish that goods are considered fully manufactured only after passing quality control tests. In this case, A.C. Pressure Pipes were subjected to testing to ensure compliance with specifications. The Tribunal concluded that the samples taken for testing, which broke and were reprocessed, fell under the ambit of Rule 57(1) as waste and scrap. Therefore, the appellants were entitled to Modvat credit, and the duty demand confirmation was set aside.Conclusion:The Tribunal allowed the appeal, ruling in favor of the appellants based on the application of relevant legal principles and precedents. The delay in filing the appeal was deemed condoned, and the Modvat credit on inputs contained in samples cleared for testing without duty payment was upheld. The judgment highlighted the importance of quality control tests in determining the status of goods as fully manufactured, supporting the appellants' claim for credit under Rule 57(1).