TMI Blog1995 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. In favour of assessee. - 7275 of 1995 - - - Dated:- 12-12-1995 - CJI and Suhas C. Sen, J. [Judgment per : Sen, J.]. - This is an appeal against an order passed by the Customs, Excise Gold (Control) Appellate Tribunal.There is no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 69/86-C.E. as amended. At the stage when the copper wires of less than 6 mm are cleared internally, the appellants reverse the MODVAT credit availed by them on the copper wire above 6 mm in their RG-23, Part-II Register maintained for Chapter 74. After clearing the copper wire of less than 6 mm internally for enamelling, the appellants manufacture the enamelled copper winding wires which is either cleared at nil rat of duty or on payment of appropriate duty. The appellants while doing so take the MODVAT credit in their RG 23A, Part-II Register maintained for Chapter 84 in so far as it pertains to the goods to be cleared on appropriate payment of duty. They submit that they do not take the credit of duty paid on the copper wire b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st March, 1988 by which copper winding wires were exempted from payment of the whole of the duty subject to the condition that the final products were manufactured from copper wire bars of over 6 mm and also subject to the stipulation that - "(b) No credit of the duty paid on goods (a) (ii) above, used in their manufacture, has been taken under Rule 57A of the said Rules." There is no dispute that the inputs which were utilised in the manufacture of the copper wires were duty paid and that the amount of duty paid on the inputs had been entered by the appellants to their credit in the ledger which has to be maintained under the Excise Rules. The credit amount can be utilised by the manufacturer towards payment of duty of excise leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which merits serious consideration. There is no doubt that the assessee should have maintained separate accounts for duty free goods and the goods on which duty has to be paid. But our attention was drawn to a departmental circular letter on this problem in which it has been clarified by the Ministry of Finance as under :- The credit account under MODVAT rules may be maintained"3. chapterwise, MODVAT credit is not available if the final products are exempt or are chargeable to nil rate of duty. However, where a manufacturer produces along with dutiable final products, final products which would be exempt from duty by a notification (e.g. an end use notification) and in respect of which it is not reasonably possible to segregate the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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