ESSORKE INDUSTRIES Vs. CCE

JUDGEMENT

(1.) THIS appeal arises from Order -in -Appeal No. 80/98 dated 17.3.1998 by which the Commissioner (Appeals) has disagreed with the appellant's contention and has held that provisions of Rule 57F(5) squarely applies to the facts of the case and in that view of the matter he has held that as waste and scrap were resultant waste arising from the processing of inputs in respect of which the appellants had taken credit of duty under Rule 57A, the appellants should have observed any one of the three categories of disposal as mentioned in Rule 57F(5). Having failed to do so, the appellants are not eligible to seek benefit of modvat credit. Hence, the demands were confirmed including imposition of penalty of Rs. 5,000/ -.

(2.) LD . Counsel Shri R. Rahavan submits that the issue is fully covered by the Judgment of larger bench of five Members of this Tribunal rendered in the case of Wyeth Laboratories Ltd. v. CCE, Bombay 2000 (120) ELT 18 (T -LB) : 2000 (92) ECR 474 (T) wherein it has been held that there is an option to exercise routes as available between Rule 57F(2) and 57F(4) procedures which is left to the manufacture and is not lost by a change in the form of input, due to processing. It has also been held that Rule 57F(4) cannot be read to be applicable to partially processed or inputs required to be sent for repairs/refining/reconditioning or carrying out any operation necessary as the case may be for manufacture of final product, as long as the procedure for Rule 57F(2) is followed. Ld. Counsel submits that in the present case, the inputs were removed to job worker for its conversion and returned to the manufacture for further use in the manufacture of final product which has been cleared on payment of duty. He submits that they have followed the procedure 57F(2) and submits that as the inputs have not been sold and it has come back after the processes were carried out by job worker and utilized in the manufacture of final product, which has been cleared on payment of duty. Therefore, the waste which was removed cannot be held to be dutiable. He submits that up to 1.9.1996 they had removed the inputs under Rule 57F(3) while after 1.9.1996 they had paid duty and removed the waste after undertaking certain processes in the hands of the job worker and having suffered duty again was utilized by the assessee. The assessee had taken modvat credit on the duty suffered in the hands of job worker. Therefore the procedure followed was correct and the Judgment of the larger bench (supra) is clearly applicable to the facts of this case.

(3.) LD . DR Shri C. Mani reiterated the departmental contention and referred to the Commissioner (Appeals) order and sought for its confirmation.