THIRUMURUGAN TEXTILES (P) LTD. Vs. CCE

JUDGEMENT

(1.) This appeal is directed against Order -in -Appeal No. 152/2002 -(CBE) (GVN) dated 23.7.2002 by which the learned Commissioner (Appeals) has upheld the order passed by the lower authority and directed that the modvat credit is required to be reversed on the waste containing cotton and viscose fibre.

(2.) Appearing on behalf of the appellant, learned Counsel, Shri R. Ganesan submits that their case is covered against revenue by the judgment rendered by this Bench in the case of CCE Madurai v. Dharani Sugars and Chemicals, 2002 (49) RLT 934 (CEGAT -Chen.) wherein it has been held that Bagasse arising during manufacture of sugar and molasses and chargeable to nil tariff rate was not final product but a waste product and, therefore, it was held that provision of Rule 57CC were not attracted and the appeal filed by revenue was rejected. He, further, submitted that what they have manufactured is yarn and in the process of manufacture of yarn, which is their final product, waste arises and on various inputs contained in the waste, the department cannot ask them to reverse the modvat credit taken on such inputs which are contained in the waste material i.e. on the waste containing cotton and viscose fibre. Ld. Counsel also distinguished the judgment rendered by the Supreme Court in the case of Chandra Magnet Wires, 1996 (93)ECC 82(SC) : 1996 (81) ELT 3 (SC) and the Larger Bench judgment in the case of Khanbhai Essofbhai and Ors., 1999 (107) ELT 557 wherein the Larger Bench had held that modvat credit is required to be reversed if taken when the final products were not dutiable. The Counsel contended that their case is not similar to the case cited by the Larger Bench as well as by the Apex Court inasmuch as the final products discussed therein were not dutiable, whereas their final product is cotton and viscose blended yarn falling under tariff chapter sub -heading 5205.11. In view of the above position, he submitted that their final product being dutiable, the modvat credit taken on the inputs contained in the waste are not required to be reversed. He, therefore, submitted that their appeal in required to be allowed.

(3.) Heard Ld. DR Shri A. Jayachandran.