2005 (1) TMI 526 - AT - Central Excise

Summary

Issues: Rectification of mistake application for recall of Final Order in Appeal Nos. E/2551/98 and E/1137/99, Modvat credit claim for a Diesel Engine purchase.

Rectification of Mistake Application:
The appellant sought the recall of the Final Order due to it being passed ex-parte, leading to the confirming of duty against the assessee. The Tribunal, after perusing the records and hearing both sides, found merit in the appellant's contention. Consequently, the Final Order was recalled, and the appeal was disposed of accordingly.

Modvat Credit Claim for Diesel Engine Purchase:
The appeals revolved around the appellant's claim for Modvat credit concerning the purchase of a Diesel Engine from M/s. Wartsila Diesel Limited. The appellant claimed the full duty paid on the engine should be allowed as credit, while the Revenue authorities contended that no credit should be allowed. The dispute arose from the reduction of the claimed credit amount by the Revenue authorities.

Factual Background:
M/s. Wartsila Diesel India Limited sold a diesel engine to the appellant, which was later damaged during transportation and repaired by the manufacturer. The appellant bore the repair costs and the excise duty on the parts used for the repair. The insurance company honored the claim, including the excise duty, on the condition that no Modvat credit would be taken on the spare parts' excise duty. The appellant, upon receiving the repaired engine, claimed credit for the duty paid on the original diesel engine. The Revenue authorities initiated proceedings against this credit claim, resulting in a partial denial of credit, leading to the appeals.

Analysis and Decision:
The Tribunal held that the appellant was entitled to the Modvat credit for the duty paid on the diesel engine as it was a capital good eligible for credit. The duty paid on the original diesel engine should be credited to the appellant. The repair and financing of the repair were deemed separate from the purchase of the engine, thus not affecting the Modvat credit claim. The Tribunal distinguished the cited case law, stating it was not applicable to the current case as it dealt with claims related to damaged goods by manufacturers, which was not the issue at hand. Consequently, the appellant's appeal was allowed, and the credit of Rs. 43,02,885/- was restored, while the Revenue's appeal was rejected.

Conclusion:
The Tribunal allowed the appellant's appeal, restoring the claimed credit amount, and rejected the Revenue's appeal. Both appeals were ordered accordingly, with the decision pronounced in open court.