2005 (3) TMI 295

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....)]. - The respondents in this appeal of the Revenue were engaged in the manufacture of "Cotton Yarn" (Chapter 52 of the CETA Schedule) and were availing the benefit of capital goods credit under Rule 57Q of the Central Excise Rules, 1944 during the material period (1-3-1997 to 31-8-1997). They had taken total credit of Rs. 31,55,136/- on capital goods received by them during the said period. The D....

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....arn, which was cleared on payment of duty, was admissible to them. The Revenue has filed the present appeal, challenging the view taken by the Commissioner (Appeals). 2. Ld. SDR has reiterated the grounds of the appeal and has also pointed out that, as the respondents had removed Cotton Waste (Hard Waste) without payment of duty during the period of dispute, they were not entitled to take Modva....

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....nal Assistant Collector of Central Excise by the manufacturer of final product seeking to avail Modvat credit on any capital goods, to the effect that such capital goods shall not be used exclusively for production of any final product which was wholly exempt from payment of duty. The word 'exclusively' occurring in the above provision is significant. The legislative intent behind the use of the w....

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....tton Waste (Hard Waste), which was exempt from duty, was also generated during the course of manufacture of Cotton Yarn. In any case, as held by the Tribunal in the case of Gobald Textiles (supra), the Hard Waste, which was cleared without payment of duty during the relevant period was not to be treated as a final product. The Revenue has no case that the respondents were registered with the Depar....