PONDY CHEM LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) DURING the period of dispute (April to June 1995) the appellants were engaged in the manufacture of Sodium Silicate and were availing Modvat credit on their input 'Soda Ash'. The Soda Ash was converted into soluble Sodium Silicate in their factory and this product was sent to their job workers under Rule 57F(3) of the Central Excise Rules, 1944 for conversion into liquid Sodium Silicate. Normally, in terms of Rule 57F(3), the goods manufactured by the job workers should be returned to the principal manufacturer, who would either remove it as such on payment of duty or process it further and remove the final product on payment of duty. In the instant case, the job workers themselves removed liquid Sodium Silicate from their factory on payment of duty, a fact noted in the order of the original authority. The question arising for consideration is whether, on these facts, it was open to the appellants (principal manufacturer) to avail input duty credit on Soda Ash. which was converted into soluble Sodium Silicate which was despatched to job workers for further processing under Rule 57F(3). The lower appellate authority has disallowed this credit to the assessee for want of evidence to show that the job workers had actually removed the processed goods (liquid Sodium Silicate) from their premises on payment of duty. Apparently, after examining the provisions of Rule 57F(3) as amended by Notification No. 11/95 -CE (NT) dated 16.3.1995, The appellate Commissioner was not in a position to allow input duty credit to the appellants in respect of the Soda Ash in the absence of evidence of payment of duty by the job workers on the liquid Sodium Silicate manufactured by the latter out of soluble Sodium Silicate manufactured by the former out of Soda Ash.

(2.) IT is submitted by Id. Counsel for the appellants that documentary proof of payment of duty by the job workers has since been produced before the Tribunal. A bunch of xerox copies of invoices issued by the job workers is seen on record it is upto the original authority to examine these documents and ascertain whether the job workers had, actually, removed the processed goods (liquid Sodium Silicate) on payment of duty. Accordingly, the orders of the lower authorities are set aside and the original authority is directed to pass fresh order of adjudication on the above issue after giving to the assessee a reasonable opportunity to adduce documentary evidence and to be personally heard. It is made clear that if it be found that the job workers had actually paid duty on the processed goods (liquid Sodium Silicate) correctable to the input in question (Soda Ash), the assessee would be eligible for input duty credit in terms of Rule 57F(3) as amended by Notification No. 11/95 -CE (NT).

(3.) THE appeal stands allowed by way of remand.