2004 (12) TMI 508 - AT - Central Excise

Summary

Issues:
Admissibility of credit of duty on various items under Rule 57Q for fabrication of machinery, substantiation of claim for Modvat credit, imposition of penalty.

Analysis:
The appellant, a manufacturer of calcium silicate insulation blocks, availed credit of capital goods under Rule 57Q for items used in fabricating machinery. A show cause notice challenged this credit for items like M.S. angles, plates, etc. The Assistant Commissioner disallowed the credit and imposed a penalty, upheld by the Commissioner (Appeals). The main issue was the admissibility of credit on these items for machinery fabrication. The Tribunal noted that for items to be considered capital goods under Rule 57Q, they must be used in or in relation to production of final products. Lack of evidence on the usage of these items led to the denial of credit. The appellant later produced a certificate from an engineer, but as this evidence was not presented earlier and lacked crucial details, it was rejected. The Tribunal upheld the denial of Modvat credit due to insufficient substantiation.

Regarding the penalty, the Tribunal found no sufficient case for a penalty of Rs. 1.00 lakh, attributing the issue to lack of proper evidence. Consequently, the penalty was reduced to Rs. 25,000 for wrong availment of credit. In conclusion, the appeal was partly allowed, with the denial of Modvat credit upheld, and the penalty reduced.