2003 (9) TMI 585 - AT - Central Excise

Summary

Issues: Eligibility for Modvat credit on duty paid capital goods financed by a finance company and the timeliness of the show cause notice.

Eligibility for Modvat Credit: The appellant, a company, procured capital goods through lease agreements with financial institutions. The appellant argued that they were eligible for Modvat credit as they had submitted necessary declarations and invoices showing the finance company's involvement. The advocate contended that the demand was time-barred as the Modvat credit was availed with proper documentation, citing precedents where similar demands were held time-barred due to the submission of RT returns along with invoices. The advocate emphasized that the absence of the agreement or certificate from the finance company should not disallow the credit, especially when the duty was paid and goods were used for manufacturing dutiable products.

Timeliness of Show Cause Notice: The Departmental Representative argued that the appellant failed to submit the required agreement and certificate as per Rule 57R(3), leading to suppression of facts and invoking a larger period of limitation. The representative suggested remanding the matter for a reconciliation statement review. However, the Tribunal noted that the appellant had submitted invoices clearly indicating the involvement of the finance companies, HDFC Ltd. and Sundaram Finance Ltd. The Tribunal highlighted that the Department was aware of the financing arrangement through the submitted RT 12 returns and invoices, concluding that there was no suppression of facts. Relying on Rule 57U(2) of the Central Excise Rules, the Tribunal held that the extended period can only be invoked in cases of fraud or suppression of facts, which was not present in this situation. As a result, the Tribunal set aside the impugned order on the grounds of timeliness without delving into the merits of the case, ultimately allowing the appeal.