2004 (1) TMI 506 - AT - Central Excise

Cenvat/Modvat - Capital goods - HR/MS plates - Appeal before Commissioner (Appeals) - New plea - Penalty - Wrong availment of Cenvat/Modvat credit

Summary

Issues:
1. Disallowance of Modvat credit under the capital goods scheme for specific items.
2. Imposition of penalty on the appellants.
3. Cross appeal filed by Revenue against extension of credit to certain items.
4. Denial of credit on HR/MS Plates and related items.
5. Denial of credit on Bailing Press.
6. Revenue's appeal against permitting credit on Lubricating System, Magnetic Pick-up, and Pace Man (Steam Packing).
7. Eligibility of Lubricating System for credit.
8. Eligibility of Pace Man (Steam Packing) for credit.
9. Eligibility of Contact Less Magnetic Pick-up for credit.
10. Outcome of Revenue's appeal and cross-objection.
11. Outcome of Party's Appeal regarding Sheets/Plates Structural items and Bailing Press credit.
12. Disposal of appeals of both Revenue and the party.

Analysis:

1. The appeal involved the disallowance of Modvat credit under the capital goods scheme for specific items by the Commissioner (Appeals) for the appellant, M/s U.G. Sugar. The appellate authority observed that the appellant failed to provide evidence regarding the precise use of HR/MS Plates and related items, leading to the denial of credit. The Tribunal upheld this decision stating that without clear establishment of these items as parts of capital goods, credit cannot be claimed. However, the Tribunal allowed a fresh examination of the claim for credit on Bailing Press, remanding the matter to the Commissioner (Appeals) for further assessment.

2. A penalty of Rs. 25,000 was imposed on the appellants, which was set aside due to the subjectivity involved in interpreting the eligibility for credit.

3. The Revenue filed a cross-appeal against the extension of credit to Lubricating System, Magnetic Pick-up, and Pace Man (Steam Packing). The Tribunal analyzed each item separately.

4. Regarding the Lubricating System, the Tribunal found that the item did not fall under the definition of capital goods as per Rule 57Q, leading to the denial of credit. The Tribunal set aside the order-in-appeal in this regard.

5. For Pace Man (Steam Packing), the Tribunal referred to a previous CEGAT judgment and concluded that as the item was used for packing a steam line and became a component part of the pipeline, it was eligible for credit. The Tribunal upheld the allowance of credit for this item.

6. The Contact Less Magnetic Pick-up was also scrutinized, with the Revenue's appeal contending that it did not qualify for credit under the specified categories. The Tribunal agreed with the Revenue, leading to the disallowance of credit for this item.

7. The Tribunal ultimately decided in favor of the Revenue regarding Lubricating System and Contact Less Magnetic Pick-up but upheld the allowance of credit for Pace Man (Steam Packing).

8. The Party's Appeal concerning Sheets/Plates Structural items was rejected, while a de novo remand was granted for the Bailing Press credit assessment. The penalty imposed was set aside due to the interpretational nature of the credit eligibility.

9. Both the appeals of the Revenue and the party were disposed of accordingly, with specific outcomes for each issue discussed and decided upon by the Tribunal.