TMI Blog2009 (7) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... tly construed disregarding fact that Notification is essentially based on Modvat Scheme and amendment by Notification No. 97/89-C.E.was to facilitate such removal from one factory to another of same manufacturer. Credit not deniable. - 1 of 1998 - - - Dated:- 22-7-2009 - A.L. Dave and K.A. Puj, JJ. REPRESENTED BY: Ms. Manisha Lavkumar, Standing Counsel, for the Appellant. None, for the Respondent. [Judgment per: K.A. Puj, J. (Oral)]. - At the instance of the Collector of Central Excise, Baroda, The Customs, Excise Gold (Control) Appellate Tribunal, Bench-C has referred to the following questions of law for the opinion of this Court.- (i) Whether on the facts and circumstances of the case, the Tribunal has erred in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, which was then used within the factory at Belapur in the manufacture of Metronidazole attracting duty at the rate of 5% basic excise plus 5% special excise duty, so that modvat credit was not required to be reversed for the inputs used in the manufacture of Glyoxal 40%. On claiming exemption by the Company-Mis. Unique Chemicals, the Assistant Collector found that when any goods are transferred under Chapter X procedure, modvat credit has to be reversed, as no duty is payable. 3. Being aggrieved by the said decision of the Assistant Collector the respondent Company filed an Appeal before the Collector of Customs and Central Excise (Appeals) Bombay. On adjudication, the Collector of Customs and Central Excise (Appeals) framed question wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been referred to the Bombay High Court in the case of Bajaj Tempo, 1995 (80) E.L.T. 531 (Tribunal) and accordingly the above questions of law were referred to this Court for its opinion. 6. Ms. Manisha Lovkumar, learned Standing Counsel appearing for the Central Excise Department has submitted that the Explanation Clause (a) to Rule 57-A stipulates that inputs which are manufactured and used within the factory of production, in or in relation to, the manufacture of final products. She has, therefore, submitted that if such inputs were not used in or in relation to the manufacture of final product, within the factory of production the modvat credit is not allowable to the respondent assessee. The credit under the modvat scheme is availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the factory of production. The benefit is also available if the inputs manufactured specified in Col umn-2 of the Table, are removed under Chapter X procedure to another unit of the same assessee for further manufacture of final products specified in Col. 3. The inputs specified in Col. 2 and final products specified in Col. 3 of the Table annexed to the said notification are one and the same, as specified in the notification issued under Rule 57A of the Central Excise Rules. The exclusion clause, bar ring certain categories of inputs such as machinery, machines, packaging materials, whose value is not included, as is found in Rule 57A, is also noticed in this notification. The Tribunal was, therefore, of the view that where inputs noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Central Excise, 1997 (95) E.L.T. 331 (Tribunal) wherein it is held that Notification No. 217/86-C.E. issui generis in giving relief to a manufacturer utilizing the duty paid inputs in manufacture of dutiable final product through the process of wholly exempted intermediate products. Its purpose is to avoid scriptory work when the wholly exempted intermediate product is utilized captively by the same manufacturer (either in the same factory or in another factory) in manufacture of dutiable final product. In the scheme of Notification No. 217/86-C.E., if for the purpose of consumption of intermediate inputs, both factories are treated as one, they have to be treated as one for the purpose of utilization of Modvat credit. If thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of diesel en gine parts free of duty in terms of Notification No. 217/86 under Chapter X procedure for use elsewhere in the manufacture of I.E. Engines. It is not a case, where the assessees cleared the goods to another factory belonging to them, where dutiable engines were manufactured from those parts and such engines cleared on payment of duty. It was a case of clearance of the parts of I.C. Engines to various manufacturers many of whom used these parts for manufacture of exempted I.C. Engines. The Tribunal further observed that the main point pleaded in that case was that they had taken credit on inputs and utilize the in puts in the manufacture of I.C. Engine parts as per declaration filed and hence subsequent reversal of credit is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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