2003 (12) TMI 483 - AT - Central Excise

Summary

Issues: Eligibility of M/s. Grasim Industries to take Modvat credit of duty paid on capital goods in 1999 availed in 2001.

Analysis:
1. The issue in these appeals revolved around whether M/s. Grasim Industries were entitled to claim Modvat credit for the duty paid on capital goods in 1999, which they sought to avail in 2001.

2. The Appellants had imported goods under the EPCG Scheme, installing them in their factory between March 1996 and June 1997. Due to non-fulfillment of export obligations, they paid differential Customs duty and countervailing duty in 1999. Subsequently, they claimed Modvat credit in 2001 based on a certificate from the Deputy Commissioner of Customs. The Deputy Commissioner denied the credit and imposed a penalty, which was upheld by the Commissioner (Appeals) who restricted the credit to 50% per financial year under the Cenvat Credit Rules.

3. The Appellants argued that Rule 57AC(2) limited the credit to 50% in the same financial year for capital goods received, with the balance usable in subsequent years. They referred to Rule 57AG as a transitional provision allowing unutilized credit earned prior to 1-4-2000. Citing a Board's letter, they claimed entitlement to the credit under Rule 57AG(1) even if not utilized by that date. They contended that the matter had become duty-neutral, as they could claim the remaining 50% credit in the subsequent financial year.

4. The Respondent, however, supported the findings of the impugned Order.

5. The Tribunal observed that the Commissioner (Appeals) had allowed the Modvat credit for duty paid on the imported capital goods, which was not challenged. Consequently, the Appellants were deemed eligible to claim 50% credit in the financial year 2001-02 and the remaining 50% in 2002-03. The Tribunal set aside the denial of the credit and the penalty, as the Appellants had not contested the disallowed credit amount. Thus, the appeals were disposed of in favor of the Appellants, upholding the disallowance of the specific credit amount.

This detailed analysis highlights the arguments presented by both parties, the legal provisions invoked, and the final decision of the Tribunal regarding the eligibility of M/s. Grasim Industries to claim Modvat credit on duty paid for capital goods.