2001 (12) TMI 297 - AT - Central Excise

Summary

Issues: Modvat credit on MS Cable Reck and Castrol Oil

Analysis:
The appeal before the Appellate Tribunal CEGAT, Bangalore arose from an Order-in-Appeal passed by the Commissioner of Customs & Central Excise, Bangalore. The issue primarily revolved around Modvat credit on MS Cable Reck and Castrol Oil. The appellant's representative submitted that they were not pressing the eligibility of Modvat credit on MS Cable Reck, leading to the dismissal of that issue. However, regarding Castrol Oil, it was argued that the Commissioner (Appeals) had acknowledged its eligibility for Modvat credit under Rule 57A. The appellant contended that even if the party did not follow the procedure under Rule 57A, the Modvat credit should not be denied if the item was eligible. Reference was made to previous Tribunal decisions to support the argument that certain items, like lubricating oil, could be considered eligible inputs under Rule 57A. The appellant emphasized that a declaration filed under Rule 57Q should be sufficient for extending credit for items classified as inputs under Rule 57A. Additionally, previous Tribunal decisions were cited to support the position that procedural lapses should not obstruct the entitlement to substantial benefits.

Upon hearing both sides and examining the records, the Tribunal noted that the party had claimed credit on the item as capital goods under Rule 57Q, which was denied by the authorities below. While the authorities acknowledged the item as an input, they refused the Modvat credit due to non-compliance with Rule 57A procedures. The Tribunal referred to previous decisions involving Devyani Beverages Ltd. and Metlon India, which emphasized that if an item fell under the Modvat Scheme, its eligibility could be assessed under the appropriate rules, even if the declaration was made under an incorrect rule. The Tribunal disagreed with the Revenue's arguments based on the Surya Roshni Ltd. case, stating that goods claimed as inputs could not be equated with capital goods for Modvat credit purposes. The Tribunal stressed that procedural lapses should not impede the entitlement to substantial benefits. Consequently, the Tribunal accepted the appellant's contention regarding the eligibility of Modvat credit on Castrol Oil and allowed the appeal concerning that specific item.