2002 (4) TMI 738 - AT - Central Excise

Summary

Issues:
1. Interpretation of Modvat credit rules regarding scrap value of tyres used in manufacturing final products.

Analysis:
The judgment revolves around the interpretation of Modvat credit rules concerning the treatment of tyres used in the manufacture of final products. The Commissioner (Appeals) had initially found that the tyres, on which Modvat credit was taken, were removed as scraps and duty was paid on the scrap value. The lower authority concluded that these tyres were not used in or in relation to the manufacture of final products, labeling them as obsolescence and found in rejection code No. 31. The appellant argued that the tyres were issued to the production line, supported by a copy of Bill Card listing of 1996-97. The Commissioner (Appeals) agreed with the appellant, stating that the tyres were indeed used in the manufacture of final products, and the lower authority failed to consider this aspect, relying solely on the Manager-QC statement. Consequently, the Commissioner (Appeals) set aside the impugned order.

The learned DR contended that the damaged tyres were not used in the manufacture of the final product and should not be treated as scrap. Referring to the Manager, Quality Control's statement, the DR argued that the tyres were recorded as rejected scrap. However, the appellant provided evidence, such as the Bill Card Listing of 1996-97, showing that the tyres were issued to the production line for manufacturing the final product. On the other hand, the respondent's counsel argued that the Manager Quality Control's statement was inadvertent, and the evidence, including the bill card listing, demonstrated that the tyres were indeed issued to the production line, rejected as scrap, duty paid, and utilized for Modvat credit.

Upon considering the submissions and evidence presented, the judge found that the appellants provided rebuttal evidence before the original authority, showing that the tyres in question were used in the production line for manufacturing finished products, rejected as waste, duty paid, and documented through the bill card listing of 1996-97. The judge concluded that when the appellant made an inadvertent entry, supported by cogent documentary evidence, it should not be rejected. The Commissioner (Appeals) had thoroughly examined the evidence and correctly determined that the tyres were used in the production line, supported by the bill card listing. Consequently, the judge confirmed the impugned order, rejecting the appeal.