Judgment:
1. The appellant filed an appeal against the Order-in-Appeal 100/CE/Alld/91 passed by the Commissioner (Appeals) Central Excise, Allahabad. The appellants are engaged in manufacture of torches and miniature bulbs. The miniature bulbs manufactured by the appellants are captively consumed by the appellant in manufacture of torches. The appellant also cleared some quantity of miniature bulbs for home consumption after payment of appropriate excise duty. Vide impugned order the benefit of Modvat credit was declined in respect of 11 inputs used in manufacture of miniature bulbs which were cleared for home consumption after payment of appropriate duty on the ground that these inputs were not used in the manufacture of final product i.e. torches as per their declaration.
2. The ld. counsel appearing on behalf of the appellants submitted that the appellants have filed a separate classification list for torches and miniature bulbs. In the appellants' classification list for miniature bulb effective from 2-4-1986 clearly mention the fact of captive consumption in the manufacture of torches as well as for home consumption. The appellants also filed revised classification list from time to time. The ld. Counsel while pointing out from the adjudicating order submitted that the adjudication authority has held that as far as captive utilisation or consumption of miniature bulb for torches are concerned, there is no irregularity for utilising credit for payment of duty on the torches. The ld. counsel further submitted that the adjudicating authority wrongly held that the credit availed on the inputs of miniature bulb cleared on payment of duty for home consumption is not admissible. The ld. Counsel also pointed out that vide letter dated 23-3-1986, they filed declaration under Rule 57G in respect of miniature bulb. This declaration was duly acknowledged by the respondents. In this declaration, they declared 11 inputs for use in the manufacture of miniature bulb. Ld. counsel also pointed out the letter dated 1-5-1986 vide which the classification list in regard to miniature bulb was filed and in this letter it is specifically mentioned that if miniature bulb will be cleared for sale as such then such clearance shall be made by us after payment of excise duty. Ld.
counsel submitted that in these circumstances the appellants are entitled to avail the benefit of Modvat credit on the inputs used in the manufacture of miniature bulb cleared for home consumption after payment of excise duty.
4. The benefit of Modvat credit on the 11 inputs used in the manufacture of miniature bulb cleared for home consumption is denied on the ground that in the declaration the appellants declared the torches as the final product and had not declared miniature bulb as such. The adjudicating authority allowed the benefit of Modvat credit on these inputs used in the manufacture of miniature bulb utilised in the manufacture of torches. We have seen the letter dated 23-3-1986 vide which the appellants filed a separate declaration in respect of miniature bulb and declared (11) inputs used in manufacture of miniature bulb. The appellants also vide letter dated 1-5-1986 filed a classification list in respect of miniature bulb and in the letter they specifically mentioned that if the miniature bulb will be cleared for sale then the clearances will be made after payment of excise duty.
When the adjudicating authority raised no objection for the inputs used in the manufacture of miniature bulbs for torches then their can also be no objection for these inputs used in the miniature bulb cleared for home consumption on payment of duty when the appellants also filed a separate classification list in respect of miniature bulbs. In these circumstances, the impugned order is set aside and the appeal is allowed.