C C EX Vs. BOTLIBOI AND CO LTD

JUDGEMENT

(1.) AT the instance of the Commissioner of Central Excise and Customs, Surat the customs, Excise And Gold (Control)Appellate Tribunal, Bombay has referred to the following question of law for the opinion of this Court under Section 35-G of the Central Excise Act, 1944;

(2.) THE brief facts giving rise to the present reference are that the respondent -assessee, namely, M/s. Batliboi and Co. Ltd. , udhna was holding central excise license for the manufacture of excisable goods falling under Chapter 8473 of the Central excise Tariff Act, 1985 and was availing benefit of Chapter VAA of Central Excise rules, 1944 and availing credit of duty paid on the goods (inputs) used in or in relation to the manufacture of the final products and utilizing the said credit towards payment of duty of excise leviable on the final products under Rule 57a is subject to fulfilling of conditions as laid down under the Rules covered under Chapter VAA of the Central excise Rules, 1944. The respondent -assessee had continued to take modvat credit for the duty paid on various inputs received by them in the RG23 Part - II register maintained by them during the period from October, 1989 to March, 1990. On scrutiny of their RG23a Part - II register with duty paid on inputs and the declaration filed by them under Sub Rule (l)of Rule 57g of the said Rules it was found that the respondent assessee had taken modvat credit on "grinding Wheels" falling under Chapter Heading 6801. 10 amounting to Rs. 29,370. 78 basic duty plus Rs. 1,466. 56 special duty total Rs. 30,837. 34 during the period from 20. 10. 1989 to 31. 3. 1990. The department was of the view that credit of inputs is admissible only when such inputs are used within the factory of production in or in relation to the manufacture of final products. Since the Grinding Wheels which were fixed on the machinery do not form part of inputs as they were not used in or in relation to the manufacture of final products, the condition laid down under rule 57a was not fulfilled. The superintendent of Central Excise has, therefore, issued demand-cum-notice to show cause dated 16. 4. 1990 as to why the credit of Rs. 29,370. 78 plus Rs. 1,466. 56 special duty total Rs. 30,837. 34, wrongly taken and utilized by the respondent: assessee should not be disallowed and recovered under Section 57-I of the Central excise Rules, 1944.

(3.) THE above show cause notice was adjudicated and order dated 6. 2. 1991 was passed by the Assistant Collector, Surat disallowing the credit of Rs. 30,837. 34 and in case the said credit has already been utilized, they should pay an amount equivalent to the amount disallowed under rule 57-I of the Central Excise Rule, 1944.