2007 (9) TMI 492 - AT - Central Excise

Summary

Issues involved: Classification of capital goods for Modvat credit under Rule 57Q.

Summary:
The appellants took Modvat credit on capital goods based on an invoice classifying the goods under SH 8431.00. The department objected, issuing a show-cause notice. The Assistant Commissioner revised the classification to SH 8474.10, allowing the credit. The Commissioner (Appeals) overturned this decision, stating goods under Heading 84.31 were not eligible for credit. The appellants appealed, arguing correct classification was essential for Modvat credit eligibility. The department contended the original classification should stand. The Tribunal considered a previous case where non-filing of Modvat declaration was condoned, suggesting wrong classification could also be forgiven.

The main issue was whether the capital goods procured were eligible for credit under Rule 57Q(1) as of the purchase date. Goods under Heading 84.31 were not eligible at that time. The supplier classified the goods under this heading, and the appellants did not challenge this classification. The Assistant Commissioner, without jurisdiction, reclassified the goods. The Commissioner (Appeals) correctly held that goods classified under sub-heading 8431.00 were not eligible for credit under Rule 57Q(1).

The Tribunal decided to remand the case for a fresh determination. The appellants were given the opportunity to obtain the correct classification from the supplier's jurisdictional authorities. If the goods were classified under a Tariff entry eligible for credit, they could claim the benefit before the Assistant Commissioner. The adjudicating authority would require authenticated documents from the supplier's jurisdictional Assistant Commissioner for the relevant period. The appellants would also have a chance to present their case.