2008 (7) TMI 678 - AT - Central Excise

Cenvat/Modvat credit - Capital goods - Demand - Time Limitation - Rule 57Q - classification of capital goods

Summary

Issues:
Admissibility of Cenvat credit on capital goods utilized in the factory from Sept.'99 to Nov.'03.

Analysis:
The appeal challenged the order disallowing Cenvat credit on various capital goods used in the factory during the mentioned period. The appellant argued that Rule 57Q, as it existed at the relevant time, did not require capital goods to be used in or in relation to manufacture. They contended that the scope of "capital goods" had been widened post an amendment. The appellant submitted detailed descriptions and manner of use for each item, emphasizing their essential role in the manufacturing process. The Department reiterated the points made in the order-in-appeal.

The Tribunal decided to analyze each disputed item individually. The judgment referred to Rule 57Q and the Table therein listing capital goods. It discussed specific items like lighting fixtures, high-pressure gauge, electric machine pump, and others. For some items, the Tribunal found that the matter needed to be reconsidered by the original adjudicating authority to determine eligibility based on actual use in the factory. The judgment also addressed the admissibility of credit on items like empty chlorine cylinders, chemicals, and accessories, providing detailed reasoning and citing relevant legal precedents.

Regarding the limitation aspect, the original adjudicating authority had invoked the extended period for imposing mandatory penalties due to alleged misdeclaration and suppression of facts. The appellant contested this, claiming they raised limitation grounds during the personal hearing. The Commissioner (Appeals) upheld the extended period invocation, alleging deliberate misuse of credit to evade duty payment. However, the judgment found that the issue of limitation had not been adequately addressed by the lower authorities, necessitating a detailed reconsideration.

In conclusion, the Tribunal remanded the matter to the original adjudicating authority for a comprehensive reevaluation of all issues, including admissibility of credit on specific items and the application of the extended period due to alleged misstatement and suppression of facts. The authority was directed to provide a well-reasoned order after affording the appellant an opportunity to present their case.