- (1.) THIS is reference at the instance of Revenue. Tribunal has referred the following question [ : 2000 (120) E.L.T. 431 (Tri. -Del.): Whether in view of the specific provisions under Rules 173H and 173L of the Central Excise Rules, 1944, re -making, refining, reconditioning, repairing or similar processes on defective goods returned to the manufacturer of the final products can be treated as an input for purpose of Rule 57A of the Central Excise Rules, 1944. Brief facts of the case are that the respondent is the manufacturer of C.R. Coils/sheets and G.P. Coils/sheets received certain consignment of C.R. Coils/sheets and G.P. Coils/sheets, which are excisable under Chapter 72 of Schedule to the Central Excise Tariff Act, 1985. The respondent has received C.R. Coils/sheets and G.P. Coils/sheets from different parties being defective and claimed Modvat credit on the value of such goods, amounting to Rs. 6,88,548/ - during the period September, 1995 to March, 1996 under Rule 57A read with Rule 57G of Central Excise Rules, 1944 (hereinafter referred to as "Rules"). Assistant Commissioner issued show cause notice on the ground that C.R. Coils/sheets and G.P. Coils/sheets are finished goods and are not raw material and, therefore, the modvat credit on such goods could not be available. The respondent submitted the reply that such goods had undergone processing of redrawing to reduce thickness, softening, smoothing, hardness, etc., resulting new finished product, which have been cleared on payment of duty. Assistant Commissioner has not accepted the plea of the respondent and has disallowed the credit of Rs. 6,88,548/ - and confirmed the demand under Rule 57 -I of the Rules vide order dated 30 -9 -1996. Against the said order, the respondent filed appeal, which has been allowed vide order dated 30 -5 -1997. Being aggrieved the Revenue filed appeal before the Tribunal, which has been dismissed vide order dated 4 -12 -1998. At the instance of the Revenue, the aforesaid question has been raised.
(2.) SRI Ashok Singh, learned Senior Standing Counsel submitted that in case of goods returned, the respondent should claim the refund of the duty paid on such goods under Rule 173L of the Rules. Since the goods returned was the final product by itself and not input/raw material, therefore, modvat credit under Rule 57A could not be claimed. He further submitted that both the so -called input and finished goods fall under the same Tariff Entry of the same Chapter. Sri A.P. Mathur, learned counsel appearing on behalf of the respondent submitted that finished goods may be input in the hand of manufacturer in case such goods is being used as raw material for the manufacturing of another final product. Therefore, C.R. Coils/sheets and G.P. Coils/sheets, etc., which have been manufactured by the respondent, and have been subsequently, returned being defective and used in the manufacturing of final product, is eligible for the modvat credit under Rule 57A of the Rules. He further submitted that under Notification No. 5/94 -C.E. (N.T.), dated 1 -3 -1994 as amended time to time. All goods mentioned in the Schedule of Central Excise Tariff are notified for the modvat credit, unless specifically excluded. The goods used by the respondent are manufactured goods and were not covered under the excluded goods and, therefore, they were eligible for the modvat credit. In case of goods returned, the refund of duty could be claimed under Rule 173L of the Rules but if it has not been claimed, it will not take away the right to claim modvat credit under Rule 57A of the Rules.
(3.) WE have considered the rival submissions.;