2005 (9) TMI 531 - AT - Central Excise

Summary

Issues:
1. Denial of capital goods credit for equipments used in off-factory mines.
2. Imposition of penalty on the assessee.
3. Allowance of capital goods credit for items used in the factory.
4. Challenge against the condonation of delay in filing declaration.

Issue 1: Denial of Capital Goods Credit for Equipments Used in Off-Factory Mines:
The Appellate Tribunal noted that the impugned order denied the assessee capital goods credit for equipments used in off-factory mines on the basis that such capital goods used outside the factory were not eligible for Modvat credit under Rule 57Q. The Tribunal found that the challenge against this denial was not pressed by the assessee. However, the Tribunal acknowledged the bona fide belief of the assessee that Rule 57Q allowed capital goods credit for such equipments, especially considering the conflicting views of different Tribunal Benches on this issue. The Tribunal accepted the explanation offered by the assessee's Consultant and concluded that the penalty imposed on the assessee was unjustifiable. Consequently, the Tribunal vacated the penalty, allowing the appeal only to this extent.

Issue 2: Imposition of Penalty on the Assessee:
The Tribunal deliberated on the penalty imposed on the assessee, which was contested by the assessee on the grounds of having no intention to evade duty while availing capital goods credit for equipments used in the mines. The Tribunal considered the bona fide belief of the assessee, supported by the inconsistent views of different Tribunal Benches on the admissibility of capital goods credit for machinery used in off-factory mines. Given the circumstances, the Tribunal found the penalty unjustifiable and decided to vacate it, thereby allowing the appeal in this regard.

Issue 3: Allowance of Capital Goods Credit for Items Used in the Factory:
Regarding the allowance of capital goods credit for items used in the factory, the Tribunal observed that the original authority had denied a part of the credit to the assessee due to a lack of declaration, which was later condoned by the first appellate authority. The Tribunal found that the challenge raised by the Revenue against the condonation of delay was frivolous and rejected it. Additionally, the Tribunal examined the items of capital goods used in the factory and determined that they were indeed utilized for the manufacture of cement during the relevant period. As per Rule 57Q, these capital goods were deemed eligible for Modvat credit, and the Tribunal dismissed the Revenue's appeal in this regard.

Issue 4: Challenge Against Condonation of Delay in Filing Declaration:
The Tribunal addressed the challenge raised by the Revenue against the condonation of delay in filing the declaration under Rule 57T. The Tribunal deemed the challenge as frivolous and rejected it, emphasizing that the delay was properly condoned by the appellate authority. Furthermore, the Tribunal highlighted the applicability of the capital goods for the manufacture of cement during the relevant period, reinforcing the eligibility of these items for Modvat credit under Rule 57Q, which led to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal's judgment resolved the issues related to denial of capital goods credit for off-factory equipments, imposition of penalty on the assessee, allowance of capital goods credit for items used in the factory, and the challenge against the condonation of delay in filing declaration, providing detailed analysis and reasoning for each issue addressed.