MRF LTD. Vs. CCE

JUDGEMENT

(1.) By this appeal the appellants viz. M/s MRF Ltd. challenge the Order -in -Appeal No. 189/98 (M -1) dated 30.10.98 passed by the Commissioner of Central Excise (Appeals), Chennai by which he has rejected the appeal filed by the appellants against the Order -in -Original No. 46/96 dated 24.12.96 whereby the original authority' had held that when cut tyres are removed without payment of duty, there is no scope for cascading effect and hence expungement of Modvat credit is well justified. He had also vacated the protest lodged by the assessee under Rule 233B of the CE Rules, 1944.

(2.) After hearing both the sides, the operative portion of the order allowing the appeal was pronounced in the open Court on 28.2.2003.

(3.) The brief facts of the case are that the appellants are engaged in the manufacture of tyres, tubes and other rubber products falling under chapter 40 of the CETA, 1985, The assessee had applied for destruction of 335 and 229 numbers of old and defective tyres respectively which were rendered unfit for marketing on account of quality reasons as per Trade Notice No. 62/93 dated 30.11.93 and permission was granted by the competent authority subject to the condition that the Modvat Credit involved on the inputs used for the manufacture of goods shall be expunged. The tyres were destroyed into pieces in the presence of the Assistant Commissioner, Chennai VIII Division on 24.5.95 and 4.9.95. The assessee had informed the department vide their letter dated 17.4.95 and 3.9.96 that they have expunged the credit under protest in terms of Rule 233B of the CE Rules, 1944. The assessee sold these cut piece of tyres as scrap at a nominal price. The Commissioner (Appeals) took the view that since the cut tyres arising out of destruction are exempted from payment of duty as per Notification No. 76/86 dated 10.2.86, Modvat credit availed on the inputs used for the manufacture of the destroyed tyres cannot be availed and that oven according to Rule 57D (1) Modvat Credit is not available for the finished goods destroyed due to some reason or other because it relates to disposal of waste arising during the course of manufacture of final product which can be cleared without payment of duty or destroyed in the presence of proper officer. It was in these circumstances that show cause notice was issued to the appellants on 6.9.96 and 12.9.96. After hearing the appellants on 28.12.96, the present impugned order was passed against which the appellants have come in appeal. In the grounds of appeal the appellants have stated inter alia that: