ORDER
P.G. Chacko, Member (J)
1. This appeal of the Revenue is against grant, by the lower appellate authority, of Modvat credit to the respondents to the extent of Rs. 1,79,076. Out of this credit, an amount of Rs. 1,31,165 is the credit allowed on original copies of invoices and the balance is the credit allowed in respect of a gear box which was used in a conveyor system used for removal of ‘bagasse’ from the place of its formation to that of its storage within the sugar factory. Both these credits relate to the period May to September 1994.
2. Ld. DR reiterates the grounds of the appeal. He submits that the credit of Rs. 1,31465 was taken by the assessee on the basis of original copies of invoices without prior permission from the Assistant Commissioner and, therefore, they were not entitled to the credit as held by the Tribunal’s Larger Bench in CCE v. Avis Electronics Pvt. Ltd., 2000 (69) ECC 272 (LB) : 2000 (117) ELT 571 (Tri.LB).
3. Ld. Counsel for the respondents, on the other hand, submits that the grounds raised by the appellant against grant of Modvat credit on gear box are untenable inasmuch as removal of waste materials like ‘bagasse’ arising out of the process of manufacture of sugar [final product] within the factory is, by itself, a part of the said process and, therefore, the gearbox should appropriately be considered to have been used for the manufacture of the final product.
4. After considering the submissions, I find that the appellant has a strong case in relation to the credit of Rs. 1,31,165 while the respondents appear to have a good case in relation to the credit of Rs. 47,911. It is settled law that, for availing Modvat credit on the basis of original copy of invoice, prior permission of the Assistant Commissioner had to be obtained during the material period. Any credit taken without such permission would not be admissible as held by the Larger Bench in the case of Avis Electronics (supra). The Revenue’s appeal is allowed to this extent only.
5. The decision of the lower appellate authority in respect of the credit taken by the assessee on gearbox has to be sustained for the reasons stated by the counsel. It is pertinent to mention in this context that even post-manufactural measures taken by a chemical industry for pollution control have been held, by the Apex Court, to be integrally connected with the process of manufacture of the chemical products. If that be so, removal of waste materials generated in a sugar factory can easily be considered to be a part of the process of manufacture of sugar. Admittedly, the gearbox in question was used for removal of such a waste material.
6. In the result, the appeal is allowed in part.