2003 (12) TMI 239 - AT - Central Excise

Summary

Issues: Denial of Modvat credit on inputs used in the manufacture of tools and dies; Claim for considering tools and dies as intermediate goods for credit.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolved around the denial of Modvat credit on inputs used in the manufacture of tools and dies. The appellants were denied credit on certain metal items like bars, rods, and flats used in making tools and dies, which were fully exempt from excise duty under a specific notification. The appellants argued that since the tools and dies were used in manufacturing finished excisable goods that attracted duty upon removal from the factory, they should be considered as intermediate goods, and credit should be allowed. However, the lower authorities rejected this claim, leading to the appeal.

The Tribunal observed that the tools and dies were rightly classified as final goods by the lower authorities and were fully exempt from duty, justifying the denial of input credit. The appellants' argument that the tools and dies should be seen as intermediate goods lacked merit as these items were not precursors to the final products and did not become part of the finished goods like motor vehicle parts manufactured by the appellants. Instead, the tools and dies were considered as aids to the manufacturing process and fell under the category of capital goods. Since the claim was made under Rule 57A for credit as inputs, and the inputs were raw materials for manufacturing capital goods, the denial of credit was deemed appropriate. The appellants failed to demonstrate that the inputs were parts, components, spares, or accessories of capital goods, further supporting the rejection of their claim.

Ultimately, the appeal was dismissed, and the decisions of the lower authorities were upheld, maintaining the denial of Modvat credit on inputs used in manufacturing tools and dies exempt from excise duty.