R. Jayaraman, Member (T)

1. All the three appeals listed above involve consideration of the same issues and hence were heard together. The appeals are against the Orders-in-Appeal indicated against each as below:

2.1 Appeal No. 300/93 is against the order-in-appeal No. P-64/93 dated 18-3-1993 passed by Collector of Central Excise (Appeals), Pune, Appeal Nos. 298/93 299/93 are against the order No. A-35/93 dated 18-3-1993 passed by the same Collector (Appeals), Pune.

2.2 The issue common to all the three appeals can be briefly stated as below : The appellants M/s. Bajaj Tempo are manufacturer of Motor Vehicles. They have more than one manufacturing unit. They receive inputs under Modvat scheme in respect of materials, which they utilise in the manufacture of Motor Vehicle parts and I.C. Engines. These motor vehicle parts and I.C. Engines are partly utilised in the further manufacture of motor vehicles in the same factory and partly sent under Chapter X Procedure for further utilisation in the manufacture of motor vehicles in another unit belonging to the appellants, in terms of exemption Notice 217/86 dated 2-4-1986 as amended by Notification 97/89 dated 1-3-1989.

2.3 The appellants M/s. Swil Ltd. are manufacturers of copper wire, copper rods, copper sheets and strips, stainless steel wire and nickel wire. They receive inputs under the Modvat scheme for the manufacture of their products. Part of these products are cleared to another factory belonging to the appellants under Chapter X procedure in terms of Notification 217/86 for further manufacture of dutiable products.

2.4 In the case of both the appellants, Department took objection that the products cleared from their factory under Chapter X procedure in terms of Notification 217/86 are exempted and hence in terms of Rule 57C of the Central Excise Rules, Modvat Credit taken in respect of duty paid on inputs utilised in the manufacture of these products cleared outside to another unit of theirs for further manufacture, is not admissible; because the goods cleared are final products and they are cleared at 'nil' rate of duty by availing exemption under Notification 217/86 and hence in terms of Rule 57C of the Central Excise Rules, modvat credit is not admissible. In view of this objection, Modvat credit taken on inputs utilised in the products cleared in terms of Notification 217/86 for captive consumption in another unit of the appellants was ordered to be reversed. The orders passed by the Assistant Collector were appealed against, before the Collector (Appeals), Pune who has rejected their appeals. Hence these three appeals are before us.

2.5 The issue involved in all the three appeals is whether Modvat credit can be denied, when goods manufactured utilising Modvat inputs in their factories but transferred to their another unit for further manufacture of dutiable final products in the said other unit.

3. The following facts emerge undisputed in all the three cases during the hearing:

(i) Inputs are received on filing declaration for utilisation of the declared final products, which per se are dutiable and duty in the normal course would have been paid in terms of Rules 9 49 of the Central Excise Rules, before their clearance for further manufacture either in the same unit or for removal outside to another unit for further manufacture of dutiable final products but for the exemption under Notification 217/86 as amended by Notification 97/89, dated 1-3-1989.

(ii) If these products are cleared otherwise than under Notification 217/86 (e.g. if I.C. Engines or motor vehicle parts are cleared as spares outside or the copper wire, copper sheets etc. are cleared to another manufacturer or for use otherwise), they are to pay duty at the appropriate rate, before such clearance.

(iii) The final products, namely motor vehicle manufactured in the other unit of M/s. Bajaj Tempo utilising the I.C. engines or motor vehicle parts and the final products such as wire mesh manufactured by the o