TaxTMI 
TaxTMI 
2001 (9) TMI 869
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....Pumps is pig iron. The pig iron is used to make C.I. Castings which they get machined from their job workers. These machined castings in turn are used in the production of both types of P.D. Pumps. The appellants are also availing Modvat credit on the inputs viz., Pig Iron under Rule 57A of the Central Excise Rules, 1944. The present dispute relates to the Modvat credit availed on the input material viz., pig iron used in the exempted variety of the P.D. Pumps. In the declaration filed by the party under Rule 57G, they have declared the ferrous waste and scrap as a final product. Such waste and scrap emerges during the manufacturing process of the machine castings. The party cleared the ferrous waste and scrap on payment of duty and took cr....
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....ng cleared on payment of duty and therefore, the Pig Iron input contained in such waste and scrap is eligible for credit is not correct as such waste and scrap emerges in the course of manufacture of the final product and are not the final products in themselves. He also observed that the provisions of Rule 57D are not attracted, as it is not a case wherein the intermediate goods are exempted from payment of Central Excise duty. 4. This is the second stage appeal of the party. I have heard Shri R.G. Sheth, Advocate for the appellants and Shri A.S. Bedi, SDR for the respondent. The ld. Counsel for the appellants has reiterated the submissions which have already been duly considered and rejected by the original as well as the lower ap....
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....y from the input materials viz., pig iron. The mainstay of the argument of the appellants is that since the waste and scrap in itself is a finished product and is being subject to payment of duty as per the rates prescribed under the Tariff, the input material is also used in the manufacture of such waste and scrap. It is argued that such being the facts, all the terms of the provisions of Rules 57A and 57G are satisfied and there is no warrant to deny them the Modvat credit proportionate to the quantity of duty of excise paid on the pig iron used in the manufacture of such waste and scrap. The basic flaw in this contention is that nobody would intend to manufacture waste and scrap as a final product and use the input material in the manufa....
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....as not used for the manufacture of final product, simply because due to water being added, a layer is created which separates the spent acid from the final product. Once the duty paid input is physically involved in the manufacturing process, that can be said to have been used despite the fact that the same is not fully assimilated in the final product. Hundred 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....