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2003 (4) TMI 191 - AT - Central Excise
Issues involved: Confirmation of duty demand for destroyed inputs awaiting utilization and for inputs used in final products that were destroyed by fire.
Confirmation of duty demand for destroyed inputs awaiting utilization: The Commissioner confirmed a duty demand for inputs destroyed by fire in the appellants' factory before their utilization. The appellant argued that as per Rule 49 of Central Excise Rules, remission of duty is available for final products destroyed by fire, and thus, the reversal of Modvat Credit for inputs in such final products was unjustified. The appellant cited precedents where duty liability remission under Rule 49 exempted the reversal of duty credit for inputs in destroyed final products. The appellant also relied on a Tribunal decision stating that Modvat credit is available upon receipt of inputs, even if not directly used in final product manufacture. However, the Tribunal found that the inputs destroyed before utilization did not qualify for duty remission or credit reversal as they were not used in or related to final product manufacture. Confirmation of duty demand for inputs used in final products that were destroyed by fire: Regarding the duty demand for inputs used in final products that were destroyed by fire, the Tribunal agreed with the appellant's argument that duty remission under Rule 49 exempted the reversal of duty credit for such inputs. The Tribunal set aside the duty demand for these inputs. However, the Tribunal rejected the appellant's claim that the destroyed inputs should be treated as final products eligible for duty remission, as the inputs were not manufactured by the appellant and did not qualify for duty remission under the deeming provisions of law. The Tribunal upheld the duty demand for these inputs. In conclusion, the Tribunal set aside the duty demand of Rs. 2,52,155.00 for inputs used in destroyed final products but confirmed the duty demand of Rs. 8,08,909.00 for inputs destroyed before utilization. The appeal was disposed of accordingly.
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