TaxTMI 
TaxTMI 
1996 (3) TMI 197
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...., Jaipur Division in terms of which the latter had held that they were liable to reverse the Modvat credit taken by them on their inputs Suphuric Acid used by them in their manufacturing process part of which was recovered by them as spent Sulphuric Acid. The Assistant Collector had held that such spent Sulphuric Acid obtained by them and removed from their factory attracted the provisions 57F(l)(ii) as it amounted to removal of the inputs as such from the factory of the manufacturer. 2.  Shri R. Nambirajan, learned advocate, stated that their case is squarely covered by the Tribunal decision in the case of Nirma Chemical Works v. CCE Ahmedabad - 1993 (46) ECR 115 = 1993 (63) E.L.T. 251. He pointed out that in the said judgment whil....
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....t the input material cannot be said to have been used in the manufacture of the declared final product but has to be held as having been cleared as such. It was this decision which was taken by the Assistant Collector and this was upheld by the Collector (Appeals) in his impugned order. He pleaded that the appeal be dismissed. 4.  We have carefully considered the arguments addressed by both the sides. We have also gone through the order-in-appeal and the order-in- original. We are not able to appreciate the validity of the finding that simply because spent sulphuric acid is recovered from the manufacturing process it has to be treated as the very sulphuric acid with which the appellant started their manufacturing operations. The app....
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....he duty paid input, which is not used in the manufacturing process, would not be eligible for the MODVAT credit. To take MODVAT credit, the final product should be dutiable. Where the final product is exempt from excise duty, no credit of the duty paid on the inputs would be available. Let us proceed to find out whether on the facts and circumstances of the case, it can be said that the entire relevant duty paid input was used in the manufacture of the final product. The MODVAT Scheme does not emphasise that during the manufacturing process, the entire duty paid input must be actually consumed, but the emphasis is on the use of the duty paid input in the manufacture of final product. The words 'used' and 'consumed' are not identical and syn....
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....red per cent absorption or assimilation of the duty paid input in the final product is not a sine qua non of MODVAT credit, but to take benefit of MODVAT Scheme, the petitioner is required simply to establish that the input was used in the manufacture of final product. The sulphuric acid (duty paid input) can be said to have been used by the petitioner in the manufacture of final product when the entire relevant quantity thereof was applied or subjected to the manufacturing." From the records of the case the High Court noted that the Department had also held that when sulphuric acid was put to manufacturing process Modvat credit could not be denied to a manufacturer of detergent, simply because the entire input was not merged as the fina....