TMI Blog2007 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act and is having its factory at Malanpur. The respondent No. 1 is engaged in the manufacture of PET Chips etc., which are falling under Chapter Heading No. 3907 of the First Schedule to the Central Excise Tariff Act, 1985. The respondent No. 1 was availing Modvat credit facility under Rule 57A of the Central Excise Rules, 1944 on various inputs including inputs as fuel used in or in relation to the manufacture of final products. 3. Two show cause notices were issued to respondent No. 1 dated 16-3-1999 and 3-8-1999 by the Deputy Commissioner of Central Excise Division, Gwalior, wherein it was alleged that the respondent No. 1 was also manufacturing the said chips for their sister concern M/s. Flex Industries Ltd., Noida on job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea that fuels are specified inputs for the purpose of Modvat scheme on which credit is admissible. In terms of Rule 57C(2) in a situation where inputs are common for use in the manufacture of both dutiable as well as exempted/nil rated final product the manufacturer has to follow any one of the three options prescribed under Rules 57CC(1), 57CC(5) and 57CC(9). Rule 57C(3) lays down that sub-rules (2) shall not apply to inputs intended to be used as fuel. In cases where inputs are used as fuel it would not be practically possible for a manufacturer to identify the quantum of fuel used in the manufacture of either dutiable or exempted final product. Hence, none of the alternatives prescribed under Rule 57CC are feasible to be followed for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed any substantial question of law. However, in the memo of appeal the appellant has suggested following substantial question of law is involved: "In the light of points discussed in para 7(B), the Tribunal does not appear to be correct in allowing Modvat credit of duty paid on fuel used in the manufacture of exempted final products, accordingly. Whether CESTAT is correct in allowing said Modvat credit?" 10. The gist of the question is whether the Modvat credit is available on fuel, which is used in manufacture or exempted final products and whether CESTAT is correct in allowing said Modvat credit. 11. For decision of the said question, it is necessary for this Court to refer some of the legal provisions. Rule 57C of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 1 assessee is manufacturing PET Chips as their own final product and removing the same on payment of duty. The assessee are also manufacturing same final product i.e. PET Chips on job work basis by using he raw material supplied by the principal manufacture i.e. M/s. Flex Industries Ltd., Noida. The PET Chips so manufactured on job work basis are being cleared to M/s. Flex Industries Ltd., Noida without payment of duty in terms of notification dated 25-3-1986 and Rule 57F(4) of the Rules. 14. The assessee respondent No. 1 is also manufacturing PET Chips manufactured on job work basis out of the material supplied by the principal manufacturer the assessee also uses some of their own inputs such as fuels on which Modvat credit ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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