TMI Blog2005 (2) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 54.08 is captively consumed in the manufacture of final products. Appellants, in 1994, took Modvat credit on certain capital goods which were used, during the said period, for the manufacture of grey fabrics which, in turn, were captively consumed in the manufacture of final products. Grey fabrics were exempt from payment of duty during the said period while the final products were dutiable. As the intermediate product (grey fabric) was not specified as final product under Rule 57Q, the department denied the benefit of Rule 57R(2) to the assessee in respect of the intermediate product, holding that availment of credit on such capital goods was barred by the proviso to Rule 57R(2) and, on this basis, a show cause notice was issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of intermediate product having to be specified as input and final product in terms of proviso (b) to Rule 57D(2) was not enforced against the assessee in view of the beneficial nature of the rule. Learned Counsel claims support from the Larger Bench decision to his contention that the fact that the intermediate product (grey fabric) in the instant case was not specified as final product under Rule 57Q in 1994 should not be pressed into service to defeat the appellants claim for the substantive benefit of Modvat credit on the capital goods used for the manufacture of the intermediate product. Learned Counsel has also relied upon the decision of this Bench in the case of CCE, Tiruchirapalli v. Sudarshanam Spinning Mills reported in 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as final product under Rule 57Q for the benefit of sub rule. Admittedly, grey fabric (intermediate product) was not specified as final product under Rule 57Q during the period of dispute. Hence, Revenue invoked the proviso to Rule 57R(2) for denying the benefit of Modvat credit on the capital goods to the assessee. According to the assessee, Rule 57R(2) was a beneficial provision made to ensure that the substantive right of a manufacturer of final product to avail Modvat credit on his capital goods was not defeated on the ground that any intermediate product manufactured by using such capital goods was, for the time being, chargeable to Nil rate of duty or exempt from payment of duty. In this connection, learned Counsel has relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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