HINDALCO INDUSTRIES LTD. Vs. CCE, ALLAHABAD

JUDGEMENT

(1.) IN the Impugned order the learned Commissioner ordered confirmation of demand of Rs. 35,82,734.54 and imposition of penalty of an equal amount. The facts of the case in brief are that the appellants are engaged in the manufacture of Aluminium and products thereof. They were availing the benefit of modvat credit on capital goods as well as inputs. They were manufacturing Bus Bar and were captively using the same availing the benefit of modvat credit on the inputs of bus bar. Bus bar was exempted from duty in terms of Notification No. 67/95 dated 16.3.1995. It was, therefore, alleged that modvat credit of inputs on bus -bar was inadmissible as per the provisions of Rule 57C. The appellants stopped payment of duty against clearance of bus -bar used captively in the manufacture of final product and hence the authorities observed that balance of credit as on 16.3.1995 in RG -23A Part II register which amounted to Rs. 34,50,268.88 could not be utilized by the appellants after 16.3.1995. It was also alleged that modvat credit of Rs. 1,32,465.66 was wrongly taken between the period 16.3.1995 to 18.5.1995. Accordingly, a show -cause notice was issued to the appellants asking them to explain as to why modvat credit amounting to Rs. 35,82,734.54 should not be disallowed to them and why penalty should not be imposed. In reply to the show -cause notice the appellants submitted that the final products of the appellants are aluminium and aluminium products; that the bus -bar was not cleared as final product but was used captively in the manufacture of aluminium and products thereof. They cited the decision of the Tribunal in the case of Flex Industries Ltd. v. CCE - - : 1998 (102) ELT 574 and in the case of Tata Iron & Steel Co. v. CCE - -2000 (117) ELT 669 in support of their plea. It was contended that in these two cases the goods manufactured within factory and used for further manufacture of the final product was intermediate goods for purpose of Rule 57D(2). It was, therefore, contended that modvat credit cannot be denied on the inputs that were used for manufacture of bus bar.

(2.) SHRI A.R. Madho Rao, learned Counsel appearing for appellant submits that the inputs used in intermediate product 'bus -bar' are inputs used in or in relation to the manufacture of dutiable final product which in the instant case are aluminium and products thereof and hence the credit in question is admissible. In support of this he cites and relies upon the decision in the case of DCM Engineering Product v. CCE - -2001 (98) ECR 262 (T) (Final Order No. 159 to 161/2001 -D dated 25.7.2001) and Shri Ramakrishna Steel Industries v. CCE reported in : 1996 (82) ELT 575 :, 1996 (63) ECR 193 (T).

(3.) LEARNED Counsel further submits that it is well settled principle in law that exemption under Notification No. 67/95 -CE is not fatal for availing the credit of the input used in the goods so exempted. In support of this contention he cites the following decision: