2003 (4) TMI 484

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.... the respondents are engaged in the manufacture of 'Texturised Yarn' falling under Chapter sub-heading No. 5403.00 and availing Modvat credit under Rule 57A of Central Excise Rules, 1944. Credit on anti-static lubricating oil, bobbins, spools, caps and packing material for the final product was sought to be disallowed on the ground that the value of the above inputs was not included in the value of the final product manufactured by the respondents. Show cause notices were therefore issued for the recovery of different amount of Modvat credit from the various respondents, under Rule 57-I of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944. The notices were adjudicated  by the Assistant Commissioner wh....

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....this Section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub section (2) of the Section 3 of Central Excise Act, 1944. Sub-sections (2) and (3) of Section 3 are reproduced as under :- Sub-section (2) of Section 3 : The Central Government may by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as chargeable with duty ad valorem and may alter any tariff values for the time being in force. Sub-section (3) of Section 3 : Different tariff values may be fixed - (a)    &n....

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....llant. Hence, these appeals by the Revenue. 3. The Revenue challenges the impugned order on the following grounds :- "Clause (iii) of proviso to Rule 57A of Central Excise Rules, 1944, clearly stipulates that "Modvat would not be available to the packaging material, the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final product under Section 4 of the Act". According to this proviso in order to be eligible for Modvat the cost of inputs, packing material shall be included in the assessable value of the final product under Section 4 of the Central Excise Act, 1944. In other words, this proviso will be attracted and consequently benefit of the Modvat will....

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....der Section 4 of Central Excise Act, 1944 and not to cases where tariff values are fixed under sub-section (2) of Section 3 of Central Excise Act, 1944. Since the benefit of Modvat on inputs/packing materials is available only in cases where final products is charged to ad valorem duty and not where tariff value is fixed for final products. Commissioner (Appeals) order as aforesaid is not on correct appreciation of the provisions of law." 4. I have heard both sides. There is no merit in the contention of the ld. SDR that Modvat credit is not admissible on inputs used in the manufacture of final products chargeable to rate of duty other than ad valorem rate, in the light of the Tribunal's orders in the case of CCE, Bhubaneswar v. ....