2003 (9) TMI 684 - AT - Central Excise

Summary

Issues:
Delay in filing declaration under Rule 57Q leading to denial of Modvat credit and imposition of penalty.

Analysis:
The appellants had imported a CMC Vertical Milling Machine and paid Central Excise duty on it. However, they faced delays in filing the declaration under Rule 57Q, which led to the denial of Modvat credit and imposition of a penalty by the Addl. Commissioner. The appellants argued that the delay was due to the machine not being in working condition initially, requiring repairs before being put to use in manufacturing excisable goods. They also highlighted that they were within the exemption limit at the time of bringing in the machine. The Tribunal considered the special reasons for the delay, including the practical challenges faced by Small Scale Industries (SSI) units like the appellants in setting up machinery and starting production. The Tribunal noted that the benefits of getting the machine operational and commencing production outweighed the procedural requirements under Rule 57(T) for the appellants, as recognized by the Circular No. 199/33/96-CX issued by the Board.

The Tribunal referred to the Board's instructions, emphasizing that delays in availing credit for capital goods may be unavoidable in certain situations. The Circular acknowledged that it may not always be possible to claim credit within six months of document issuance for capital goods. The Tribunal held that the Revenue should not deny the benefit of capital goods credit based on rigid interpretations, especially when the duty paid nature of the item and its eligibility were not in question. The Tribunal also noted that previous cases like Sameer Glass Ltd., Surya Prabha Mills Ltd., and SAIL had relied on the Circular, establishing its binding nature on the Revenue. The Tribunal found no valid reasons presented by the Departmental Representative (D.R.) to deviate from the Circular's guidelines, leading to the conclusion that the credit could not be denied in this case.

Ultimately, based on the above analysis and findings, the Tribunal set aside the order that denied the Modvat credit and imposed a penalty, thereby allowing the appeal in favor of the appellants.