COMMISSIONER OF C. EX. Vs. METRO TYRES

JUDGEMENT

(1.) The barely needed facts, relevant for disposal of present reference-petition at the instance of the revenue, are that the respondent-assessee M/s. Metro Tyres (for brevity "the assessee") was engaged in the manufacture of Moped and Cycle chains. The Moped chains were exported under bond without payment of duty and Cycle chains were exempted from payment of duty. The assessee was availing the Modvat facility, in respect of inputs used in the manufacture of Moped chains and no Modvat credit was availed, in respect of inputs, which were being used for the manufacture of exempt Cycle chains, as contemplated under Rule 57-C of the Central Excise Rules, 1944 (for short "the Rules").

(2.) Admittedly, the scrap generated during the manufacture of cycle chains became dutiable at the relevant time. Since the Moped chains were being exported without payment of duty, the Modvat credit availed, in respect of inputs got accumulated. In the wake of clearance of scrap generated during the manufacture of Moped as well as Cycle chains, the assessee paid duty partly through PLA and partly through the Modvat credit accumulated in RG 23A.

(3.) The revenue claimed that the duty ought to have been paid through PLA as the final product i.e. Cycle chain was exempted from duty and as such, no credit was available, in respect of manufacture of the same. Accordingly, a demand was raised in this regard, for the relevant period, to which the assessee tried to explain that it has rightly and legally claimed the Modvat credit.