2005 (5) TMI 408

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.... 2. Shri G. Shivadass, learned Advocate appeared on behalf of the appellants and Shri L. Narasimhamurthy, learned SDR for the Revenue. 3. The Modvat scheme was extended to goods falling under Chapter 59 w.e.f 16-3-95 vide Notification No. 8/95-C.E., dated 16-3-95. The appellants are engaged in the manufacture of 'Nylon tyre cord fabrics' falling under Chapter 59. Therefore, they opted to avail the Modvat scheme and filed a declaration on 24-3-95 under Rule 57G of the Central Excise Rules. The appellants had inputs and finished goods in stock on which they desired to avail the Modvat credit and, therefore, filed another declaration on 17-4-95 under Rule 57H of the CER, 1944. The Revenue proceeded to issue SCNs proposing to den....

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....ssioner, (Appeals) notwithstanding the procedural lapse, has allowed the credit on the stock of inputs lying in the job worker's premises. (3)   The department has denied credit of duty paid on the yarn contained in the fabric on the ground that the appellants had actually received the fabric as the input. The yarn is the input in the manufacture of 'Dipped nylon card fabric' and therefore it is an input as per the definition of Rule 57A. (4)   The Commissioner (Appeals) has denied the credit on the ground that the appellants have not declared yarn as an input under the 57G declaration and, therefore, not entitled for credit. Appellants submit that they are claiming credit as per provision of Rule 57H and not under....

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....allowed on the ground that the appellant has received duty paying documents evidencing payment of duty on fabric and not on yarn. Rule 57H explicitly provides for allowing credit on inputs. In the case at hand, I find that yarn is not an input of the appellant. In fact records reflect that in the 57G declaration, dated 24-3-95, yarn falling under Chapter 59 has not been declared as inputs. What has been received in the factory is not yarn, but fabric. The appellant has also not produced any invoice/document evidencing payment of duty on yarn by him. Above all, if at all anybody is entitled to credit of duty paid on yarn, it is the manufacturer of the fabric and certainly not the appellant. In fact the possibility that the manufacturer of fa....