1996 (7) TMI 272

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..../95-NB, dated 11-9-1995. The brief factual background leading to the present decision is as follows : The applicants are engaged in the manufacture of tyres, tubes, flaps and other rubber products. They were availing of Modvat facility under Rule 57A of the Central Excise Rules, 1944. Prior to April, 1992 in respect of the inputs used in the manufacture of tyres/tubes cleared at nil rate of duty the applicants had been reversing the Modvat credit taken by making a debit entry in their RG 23A Part II register. However, by a letter dated 21-5-1992, they informed the Assistant Commissioner that they would not be reversing the amount of Modvat credit taken in respect of tyres/tubes cleared at nil rate of duty. The applicants were thereafter ....

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....r Tyres Ltd. reported in 1992 (62) E.L.T. 104. However, the Commissioner of Central Excise, New Delhi, rejected the applicants' contention and held that the amount specified in the show cause notices were recoverable since Modvat credit was wrongly availed by the appellants in each case in the respect of exempted tyres/tubes during the period specified in the respective show cause notices. 2. The Tribunal disposed of the appeals against the Commissioner's order by a common order upholding the order of the Commissioner. In so doing, the Tribunal followed its Larger Bench decision in the case of Kirloskar Oil Engines v. C.C.E., reported in 1994 (73) E.L.T. 835 in which it was held that in terms of Rule 57C of Central Excise Rules, Mod....

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....the final product in the context of Notification No. 217/86 as amended by Notification No. 97/89. This Notification exempts goods manufactured in a factory (referred to in the notification as inputs) used captively in the further manufacture of final products which are to be cleared on payment of duty in the same factory of production or in another factory of the same manufacturer. In the latter case, such inputs should be cleared under bond in terms of the procedure laid down in Chapter X of Central Excise Rules. In that case, the department denied Modvat credit of duty on basic inputs used in manufacture of intermediate goods removed to another unit under bond in terms of Notification No. 217/84. Since the intermediate inputs were cleared....