M/S. ESCORTS LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI

M/S. ESCORTS LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI

MODVAT credit is admissible for duties paid on inputs used to manufacture parts that are subsequently used in the manufacture of tractors on which duty is paid; parts are intermediate products not final products, so Rule 57C does not apply in such cases. Clearing parts from one factory to another without payment of duty by virtue of Notification No. 217/86-CE does not disentitle the appellant from claiming MODVAT credit. However, credit is not available for parts sold in the open market or used in manufacture of tractors on which no duty is paid.

Parties
Appellant: Escorts Ltd.; Respondent: Commissioner of Central Excise, Delhi
Jurisdiction
India
Judgment Date
25 August 2004
Procedural Posture
Civil Appeals / Appeal From Central Excise and Gold (control) Appellate Tribunal (cegat)
Outcome
Appeals allowed
Legal Topics
MODVAT Credit, Exemption Notification, Intermediate and Final Products, Captive Consumption
Central Excise Law MODVAT Credit Exemption Notification Intermediate and Final Products Captive Consumption

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 4 Party arguments 2
Sign in to unlock

Parties

Escorts Ltd.

Appellant

Commissioner of Central Excise, Delhi

Respondent

Procedural Posture

Civil Appeals / Appeal From Central Excise and Gold (control) Appellate Tribunal (cegat)

Legal Issues

  1. 1 Whether MODVAT credit is admissible on inputs used in manufacture of parts that are transferred between factories of the same manufacturer without payment of duty under Notification No. 217/86-CE dated 2-4-1986
  2. 2 Whether Rule 57C of Central Excise Rules, 1944 applies to such intermediate products

Ratio Decidendi

MODVAT credit is admissible for duties paid on inputs used to manufacture parts that are subsequently used in the manufacture of tractors on which duty is paid; parts are intermediate products not final products, so Rule 57C does not apply in such cases. Clearing parts from one factory to another without payment of duty by virtue of Notification No. 217/86-CE does not disentitle the appellant from claiming MODVAT credit. However, credit is not available for parts sold in the open market or used in manufacture of tractors on which no duty is paid.

Court Disposition

Appeals allowed

Orders

  • Impugned judgment and order of Commissioner of Central Excise set aside
  • Appellant entitled to MODVAT credit on duties paid for inputs used for manufacture of parts, so long as parts are used in manufacture of tractors on which duty is paid