2008 (7) TMI 61

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...., West Regional Bench at Mumbai in Appeal No. 4081 /98. The issue involved in the present case is as to whether the Respondent-Assessee is entitled to modvat credit on low Sulphur heavy stock (in short "LSHS") used in the manufacture of steam which in turn was used for the manufacture of the final product, namely, fertilizer which was fully exempt from payment of excise duty. 2. The Respondent was receiving duty paid LSHS and was availing of modvat credit thereon under the provisions of Rule 57(B) of the Central Excise Rules 1944 (in short The Rules ). The LSHS so procured was used in the generation of steam which in turn was exclusively used in the manufacture of fertilizers exempted from payment of excise duty under the Tariff itself. ....

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....23rd March, 1998, disallowed the modvat credit to the tune of Rs. 1,50,76,569/- in respect of LSHS used in the manufacture of steam which in turn was used in the manufacture of fertilizer which was exempted from the whole of excise duty leviable thereon. The Assistant Commissioner further held that in terms of Rule 57C of the Rules, modvat credit shall not be allowed on such quantity of inputs which were used in the manufacture of final products which were exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty. Since fertilizers were fully exempt from payment of excise duty, the Respondent was not entitled to avail of the modvat credit on LSHS used for manufacturing steam which was used for the manufa....

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....ontention raised by the Respondent, namely that as per Rule 57B(1)(iv), the Modvat credit was available on the inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production. The Tribunal decided the case in favour of the Assessee relying upon a decision of the Tribunal in the case of Raymond Ltd. v. Commissioner of Central Excise, Mumbai III, 2000 (37) RLT 447(CEGAT), wherein it has been held that the Modvat credit would be available on inputs used to manufacture steam which was in turn used for manufacture of exempted or nil duty rated final product or for any other purpose. It is stated before us that no appeal has been preferred by the Revenue against....