2007 (3) TMI 615

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....out payment of duty. 2. As per facts on record the appellants are doing job-work of motor vehicle parts for M/s. Endurance Systems in terms of Provisions of Rule 57F(4). The appellant procured certain capital goods in the year 1999 and availed benefit of Modvat credit on the same. During July 1999 to July 2000 the appellant had used the said machine only for manufacture of goods on job-work basis which were cleared without payment of duty and as such the same were exempted and the appellant is not entitled to avail the benefit of Modvat credit. On the other hand the appellants have contended that they had manufactured the goods themselves also, though the value of such manufactured goods is much less and the same is only one time ma....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ing the procurement of raw material by the appellant, sending the goods to the job-workers under Section 57F(4) and clearance of the final product on payment of duty. Merely because transport documents could not be produced cannot lead to any conclusion that the goods were not manufactured by the appellant. 4. Apart from the above it is seen that the Commissioner has denied the benefit on the ground that the appellant had undertaken the manufacturing activities only with an intention to avail credit in respect of capital goods, which were otherwise being used for the manufacture of the goods on job-work basis. For better appreciation, I reproduce para 8 of the Commissioner (Appeals) Order :- "8. Even assuming that the single mino....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lusively" occurring in Rule 57R(1) should be construed to mean "mainly or substantially" considering the context in which it has been used, as discussed above. I, therefore, hold that Modvat credit was not admissible to the appellant under the facts and the circumstances of the case on the point of law also." 5. I do not agree with the above reasoning of the appellate Commissioner. The expression "exclusively" used in Rule 57R does not mean "mainly or substantially" in common English language. The use of the said expression means "solely and only". As such, the credit on the capital goods can be denied only in a situation were the same have not been at all used in the manufacture of duty paid goods. As such, I do not agree with the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....emsp;It is also the appellant's contention that the said capital goods have been used by them in the subsequent years for manufacture of their own goods which are cleared on payment of duty. As there is no time limit for utilization of the credit, the credit cannot be denied to them on the ground that initially the capital goods were used for manufacture of goods on job-work basis. For the said purpose, reliance is placed on the decision of the Tribunal in the case of Arvind Mills Ltd. v. CCE, Ahmedabad reported in 2005 (182) E.L.T. 362 (T) = 2005 (68) RLT 212 (CESTAT-Mum). The Tribunal in the said decision has held that capital goods initially used in the manufacture of cotton knitted fabrics chargeable to nil rate of duty but subsequently....