TaxTMI 
TaxTMI 
TaxTMI 
1991 (11) TMI 145
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....puter peripherals EPABX and parts thereof falling under Ch. sub-head 8471.00, 8517.00 and 8473.00 of Central Excise Tariff. The appellants are availing Modvat credits on various inputs used in the manufacture of final products under Rule 57A of Central Excise Rules, 1944. On 27-11-1990 a fire accident took place in the manufacturing premises of appellants' unit causing severe damages to the inputs on which Modvat credits have been taken, used in the manufacture of finished products and the appellants have requested to allow them to retain Modvat credits taken in respect of the inputs which was in the process of manufacture but destroyed in the fire accident. A show cause notice dated 23-4-1991 was issued by the Range Superintendent asking t....
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....olved on inputs used in the manufacture is Rs. 12,03,621.53 and stock in stores Rs. 90,496.50. He also relied upon the following decisions reported in 1991 (53) E.L.T. 65 (Tri.), 1991 (51) E.L.T. 265 (Guj.) = 1990 (26) ECC 324 (Guj.) & 1991 (51) E.L.T. 165 (SC) and the Trade Notice issued by the Collector, Central Excise, Madurai and urged that the trade notice is binding on lower authorities. 4. I have considered the submissions made in the appeal. The point for consideration is whether the appellant would be eligible to avail the Modvat credit on the inputs which have been destroyed in the course of manufacture of finished products or they should reverse the modvat credit taken by them. The undisputed facts are that there was a fire acci....
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....s which have suffered duty. According to him the term "used" appearing in Rules 57A and 57F has to be read in conjunction with declared finished goods which suffered central excise duty. In other words he has held the appellant is ineligible for retaining the modvat credit on the ground that these inputs have not gone into the finished products which suffered duty. The appellant has challenged the said order on the ground that once the inputs have been actually issued and are in the process of manufacture then it should be held that they no longer remain as inputs but should be taken as having been used in or in relation to the manufacture of final products. They have pointed out that Rule 57-1(1) is not applicable nor Rule 57-1(2). They co....
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....xcise on any of the final products in or in relation to the manufacture of which such inputs are intended to be used and not necessarily that Modvat credit has to be used only for clearance of the finished products in which the same inputs are contained. Further the clause (i) of sub-rule (3) of Rule 57F also makes it clear that the inputs on which the credit is taken must be intended to be used in the final products. In other words, even the intention is enough to take modvat credit subject to the other conditions being fulfilled. In this case, these inputs have been actually issued and were in the process of manufacture when they got damaged due to the fire accident. Further as rightly contended by the appellant the recovery of credit ava....
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....for to order reversion of the credit or to demand the equivalent amount of credit availed by the appellant. As earlier observed by me Rule 57-1 of the Central Excise Rules, 1944 does not give any authority for ordering such recovery. 6. The appellant has relied upon a Trade Notice issued by the Collector of Central Excise, Madurai, referred to above. A corresponding trade notice has been issued by the Collector, Central Excise, Bangalore vide Trade Notice No. 211/88 dt. 19-9-1988 according to which no credit of duty paid on inputs which are destroyed before actually being used in the manufacture of final products would be admissible and therefore the same should be reversed. The appellant has relied upon this and contended that in view of ....