COMMISSIONER OF CENTRAL EXCISE, Vs. SURYA ROSHNI

JUDGEMENT

(1.) REVENUE has filed this appeal assailing the order passed by the Commissioner (Appeals). Ld. Commissioner (Appeals) held that the nature of the manufacturing activity is such that a large portion of the inputs are rendered as scraps and waste and this fact has been recognised by specifying them as final products in the table annexed to Notification No. 5/94 -CE. (N.T.) dt. 1 -3 -94; that this aspect has not been commented upon either because it has been overlooked and the appellants did not want to contest it because it forms part of a Govt. of India Notification; that since these goods have been specified as final products and arc cleared on payment of duty, there is no reason why the appellants cannot take Mod vat credit on inputs which have gone into their manufacture.

(2.) THE facts of the case briefly stated are that the respondents herein are engaged in the manufacture of Fluorescent Tube Light, Tungsten Halogen Lamps and Class Bulbs. The appellants also opted for availing Modvat credit facility under Rule 57A of Central Excise Rules, 1944. During the scrutiny of their R.T.I2 returns for the months of Sept. 1994 to Aug. 1996, it was observed that the appellant had taken Modvat credit of duty paid on GLS, Glass Shells and Aluminium GLS Cans used in the manufacture of final product namely vacuum and gas filled electric bulbs which are cleared at 'Nil' rate of duty under Notification No. 46/94, dt. 3 -9 -94. Accordingly, a SCN was issued to the respondents asking them to explain as to why the Modvat credit taken and utilised by them should not be disallowed and recovered from them under Rule 57 -1. The Addl. Commissioner disallowed Modvat credit and imposed the penalty of Rs. 10,000/ -. The appellants filed an appeal before the Commissioner (Appeals) who held as indicated above.

(3.) ARGUING the case for the Revenue Shri D.N. Choudhary, Ld. DR submits that in the instant case gas filled bulbs were the final product and not the waste which the respondent cleared on payment of duty. He submits that since the final product i.e. gas filled bulbs are exempt, therefore, in terms of Rule 57C, the respondents were not eligible to avail Modvat credit on inputs. Ld. DR submits that final product has been defined under Rule 57A. He submits that in this case the final product is gas filled bulb and not waste which was cleared on payment of duty. He, therefore, submits that embargo under Rule 57C shall be applicable in this case and therefore, he submits that Commissioner (Appeals) has incorrectly allowed the appeal of the respondent herein. Ld. DR, therefore, prays that the impugned order may be set aside and the appeal filed by Revenue may be allowed. Arguing the case for the respondent Shri A.R. Madhav Rao, ld. Counsel submits that Central Board of Excise and Customs under their letter F. No. 345/2/2000 -TRU, dt. 29 -8 -2000 in para 6 clarified :