2010 (3) TMI 975 - AT - Central Excise

CENVAT credit - whether credit of ₹ 8,19,615/- availed on spares of conveyor system falling under Heading 84.74 which was not the heading specified in the list of eligible capital goods during the period in dispute, namely, 23-7-1996 to 31-8-1996 is admissible to the appellants herein, who are manufacturers of cement? Held that - the intention of the Government was not to restrict the credit of duty on capital goods falling under Chapter Heading 84.74 in view of the amendment to Notification No. 14/96-C.E., dated 23-7-1996 (wherein Heading No. 84.74 was excluded from the coverage of capital goods) by issue of N/N. 25/96-C.E., dated 31-8-1996, wherein goods falling under Heading 84.74 were specified in the list of eligible capital goods - N/N. 25/96-C.E., dated 31-8-1996 is retrospective and, therefore, the goods in dispute are to be treated as eligible capital goods even during the intervening period between 23-7-1996 and 31-8-1996 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of credit on spares of conveyor system under Heading 84.74 during a specific period.

Analysis:
The main issue in this appeal is whether the credit availed on spares of a conveyor system under Heading 84.74 during a particular period is admissible. The appellant, a cement manufacturer, sought credit of Rs. 8,19,615/- on these spares, which were not listed as eligible capital goods during the period from 23-7-1996 to 31-8-1996. The second issue regarding the eligibility to credit of Rs. 44,860/- was not pursued during the proceedings.

The contention revolved around the eligibility of duty credit on capital goods falling under Chapter Heading 84.74. The appellants argued that the amendment through Notification No. 25/96-C.E., dated 31-8-1996 restored the eligibility of goods under this category, despite their exclusion in a previous notification. They relied on a Supreme Court decision to support their claim, emphasizing that the reinstatement of exemption through a subsequent notification was clarificatory and retrospective in nature. The consistent policy of granting exemption was highlighted to justify the retrospective effect of the reinstated eligibility.

The Tribunal carefully considered the arguments presented by both sides. It acknowledged the intention of the Government not to restrict the credit of duty on capital goods falling under Chapter Heading 84.74. Drawing parallels to the Supreme Court decision and citing similar Tribunal cases, the Tribunal concluded that the notification restoring eligibility was retrospective. Consequently, the goods in question were deemed eligible capital goods even during the intervening period between 23-7-1996 and 31-8-1996. Therefore, the impugned order was set aside, and the appeal was allowed.

In conclusion, the judgment delved into the interpretation of notifications regarding the eligibility of duty credit on specific capital goods. By analyzing past decisions and legal principles, the Tribunal determined that the reinstatement of eligibility through a subsequent notification had a retrospective effect, leading to the allowance of the appeal in favor of the appellant.