2001 (2) TMI 230

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....intermediate product emerging has not been specified as an input or final product under Notification issued under Rule 57A. However, the Commissioner (Appeals) disagreed with him in the light of the judgment noted and the reasoning recorded in para 3 of his order which is reproduced below : "I have gone through carefully the facts of the case and the submissions made by the appellant. The issue involved in this appeal is as to whether credit of duty is admissible on polyester staple fibre which was used in the manufacture of polyester/cotton blended yarn during the manufacture of which carded/combed cotton merged as an intermediate product. The lower authority has held that carded/combed cotton is not specified as an input or as a final ....

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.... about the intermediate product being marketable or not. It is contended that the AC had made this point amply clear in his earlier Order No. 74/95, dated 16-3-1995 that the during manufacture, polyester 67% and cotton 33% blended yarn, no intermediate product falling under Heading 52.02 emerges since polyester fibre was pre-dominant. It is contended that the order of the Commissioner (Appeals) is not in keeping with the CEGAT's direction in the remand proceedings. It is contended that Modvat credit cannot be extended to Polyester/staple fibre which was used in the manufacture of polyester/cotton/blended yarn for the various reasons made out in the appeal memo. 3. The learned SDR strenuously argues and seeks restoration of the Order-in-O....

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....in a Notification issued thereunder. Rule 57B sets out that in respect of inputs purchased from small scale units, credit shall be allowed at the rate that was applicable to such inputs. Therefore, Rules 57A and 57B are the rules relating to allowing of credit. On the other hand, Rule 57C says that no credit of duty paid on inputs shall be allowed when the final product is exempt .......". Thus Rule 57C is a Rule relating to non-allowing of credit. However, Rule 57D(2) does not refer to credit being allowed or not allowed but uses the expression "credit shall not denied or varied". To our minds, Rule 57D(2) does not set out the condition precedent for extending Modvat credit to an assessee. Non-fulfilment of condition of Rule 57D(2) cannot ....