2004 (6) TMI 566

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....ll under Chapter 95 - moulded furniture under 94 and woven sacks and household articles under Chapter 39. They avail of Modvat credit on polypropylene (PP) granules used in the manufacture of woven sacks and moulded furniture and clear the same on payment of appropriate duty. The appellants avail of the benefit of Notification No. 4/97-C.E., dated 1-3-97 which exempts the household products falling under chapter 39 from payment of Central Excise duty provided no Modvat is availed on the inputs that go into the manufacture of such products. It is the contention of department that the appellant-company violated the condition of the said notification while clearing household articles at Nil rate of duty inasmuch as they used the inputs on whic....

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....f dutiable goods, was used. (c)     There is also a minor issue regarding classification of toy tables manufactured by the appellant. The appellant claimed classification of this product under Chapter 95 attracting Nil rate of duty. The department holds that the product is classifiable under chapter heading No. 9403 of Central Excise Tariff Act. The appellant did not press this issue before the Commissioner. 4. Heard both sides. 5. The thrust of ld. Advocate Shri Naresh Thacker's argument is that the Revenue failed to establish that the appellant used inputs on which Modvat credit was taken in the manufacture of household goods which were cleared under Notification 4/97. He argued that the appellants p....

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....not procure 391 MT, of reprocessed granules from anywhere. Still they produced a certain quantity of exempted goods during the period 3/97 to 12/97. The question that arises is as to where the appellants' got the raw material from that went into the manufacture of exempted goods. The answer is provided by Shri Arun Santhanama, the Technical Manager. In his statement dated 27-3-98 he clearly admitted that inputs on which credit has been taken were used in the manufacture of exempted household goods. There is no reason to cast any doubts on this statement in the light of the fact that the appellant failed to explain the source of raw material used in the manufacture of exempted goods. This is not a case of clandestine removal, where perhaps t....