COLLECTOR OF C EX Vs. INDIAN ALUMINIUM COMPANY LTD

JUDGEMENT

(1.) THIS is an application seeking stay of the operation of the order dated 29.2.88 passed by the Collector of Central Excise (Appeals), Madras by which he had set aside the order of the Assistant Collector, Belgaum Division, dated 13.10.87 and held that the respondents herein are entitled to MODVAT credit on intermediate products manufactured by them. Since the issue involved in the appeal itself lies in a short compass and is to be taken up for disposal to-day, the Stay Application is dismissed.

(2.) Appeal No. E/318/88/MAS. - This appeal has been preferred by the Collector of Central Excise, Belgaum against the impugned order of the Collector of Appeals referred to above. The respondents manufacture Aluminium. They filed declaration under Rule 57G of the Central Excise Rules opting to work under the MODVAT Scheme. They declared recovered Cryolite and Soderburg paste as inputs for the final product, namely, Calcined Alumina. The inputs namely, Cryolite and Sunderburg pasts, are manufactured by them and captively used in producing the final product. They also paid duty on the inputs so captively consumed. Since there was no exemption for such captive consumption from 1.3.1986 to 14.3.1986 they also availed of MODVAT credit on such duty paid on the cap-tively consumed inputs. Meanwhile Notification No. 197/86, dated 14.3.1985 was issued which amended the Explanation under Rule 57A which has specifically laid down that the term input for the purposes of MODVAT credit would include captively produced and consumed inputs, in the manufacture of final products. The jurisdictional Assistant Collector therefore issued Show Cause Notice on 28.8.1986, consequent upon an Audit Objection raised, on the credits availed on the captively consumed inputs from 1.3.1986 to 13.3.1986 and confirmed the demand. The order of the Assistant Collector was challenged in appeal by the respondents herein and the Collector (Appeals) set aside the Assistant Collector's order.

(3.) SHRI N. Mukherjee, the learned Counsel appearing for the respondents contended that the material had been duly declared as inputs under Rule 57-G and had been so accepted by the Department. The respondents had paid duty on them and thereafter they had availed of MODVAT credit. The materials were also covered by Notification specifying them as inputs eligible for MODVAT credit. In such circumstances, the reasoning of the Collector (Appeals) is well-founded and needs no modifications.