J.L. Gupta, J. - (1.) THE respondent was registered for the manufacture of polythene bags. It claimed Modvat credit of Rs. 68,527/ - for the quarter ending September, 1996 and of Rs. 49,561/ - for the subsequent quarter ending with December, 1996.
(2.) ON March 21, 1998 the adjudicating authority disallowed the credit and imposed a penalty of Rs. 19,000/ -. This was so done on the ground that the unit was actually manufacturing polythene sheets and tubes. The respondent appealed. The Commissioner (Appeals) accepted the claim vide order dated October 28, 1999. The department challenged the order of the Commissioner (Appeals) before the Tribunal. Vide Order dated April 24, 2000 the appeal was dismissed. Hence this petition under Section 35H(1) of the Central Excise Act, 1944 for a direction to the Tribunal to refer the following question for the opinion of this Court : - "Whether the Tribunal is correct in allowing the party to utilise Modvat credit for payment of duty on final product without declaring the same as their final products as required under Rule 57G of Central Excise Rules, 1944 - We have heard Mr. Rajesh Gumber, learned Counsel for the petitioner. He contends that even though the unit had been registered for the manufacture of polythene sheets and tubes as well on a subsequent date, it was not entitled to claim Modvat credit for the manufacture of sheets etc. as it was not registered for that purpose during the two relevant quarters. Thus, the view taken by the Commissioner (Appeals) and the Tribunal cannot be sustained.
(3.) ADMITTEDLY the polythene bags can be made only from polythene sheets. Thus, the manufacture of polythene sheets would not be contrary to the initial registration. If the manufacture of sheets is essential for the making of polythene bags, the respondent shall be entitled to the credit as claimed by it.;