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Issues:
1. Eligibility of Modvat credit for Light Diesel Oil (LDO) under Rule 57A of Central Excise Rules, 1944. Analysis: The appeal before the Appellate Tribunal concerned the eligibility of the appellant for the benefit of Modvat credit under Rule 57A in relation to the use of Light Diesel Oil (LDO) for manufacturing brass sheets and circuits. The Commissioner (Appeals) had allowed the Modvat credit, setting aside the Assistant Commissioner's order denying the credit, citing a Tribunal decision in a similar case. The department contended that LDO is not covered as an input under Rule 57A, referencing Notification 5/94-C.E. which lists items eligible for Modvat credit, excluding certain goods like LDO. The department argued that since Motor Spirit and HSD Oil are not eligible for Modvat credit, LDO should also be excluded based on its similar function. In response, the appellant's representative argued that LDO was used as fuel for melting raw materials to produce the final products, brass sheets, and circles. They pointed out that Rule 57A's Explanation (c) covered inputs used as fuel, indicating LDO's eligibility. Additionally, they argued that Notification 5/94 (N.T.) excluded High-Speed Diesel Oil, not LDO, as LDO has distinct properties and uses. The Tribunal considered precedents where inputs like furnace oil and LSHS oil were deemed ineligible for Modvat credit for specific uses. However, in the present case, the use of LDO as fuel for melting raw materials directly for the manufacturing process fell under Explanation (c) of Rule 57A, making it eligible for Modvat credit. The Tribunal upheld the Commissioner (Appeals)'s decision, dismissing the department's appeal based on the specific use of LDO in the manufacturing process of brass sheets and circuits. In conclusion, the Tribunal found no reason to interfere with the Commissioner (Appeals)'s decision, affirming the eligibility of the appellant for Modvat credit for using LDO as fuel in the manufacturing process.
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