2005 (1) TMI 724 - AT - Central Excise

Summary

Issues:
Revenue's appeal against dropping of proceedings by the Commissioner of Central Excise based on modvat credit eligibility for capital goods and generating sets supplied by a third party.

Analysis:
The case involved two appeals filed by the Revenue challenging the dropping of proceedings by the Commissioner of Central Excise against two assessees regarding the eligibility of modvat credit for capital goods and generating sets supplied by a third party. The Show Cause Notice alleged that certain goods did not conform to the definition of capital goods under Rule 57Q. The Commissioner upheld the assessees' eligibility for modvat credit and found the demands beyond the limitation period with no elements of fraud or suppression. He also noted the procedural irregularity in the issuance of the Show Cause Notice by the Superintendent instead of the Commissioner. The Commissioner accepted all other pleas and dropped the demands against the third-party supplier under relevant sections of the CE Act. The Commissioner also found that the third-party supplier had supplied goods exempt from duty under a specific notification and had already paid the duty. The Commissioner concluded that the assessees were eligible for modvat credit, leading to the Revenue's appeal.

In the hearing, the Senior Departmental Representative (SDR) reiterated the grounds of appeal, while the Counsel for the assessees pointed out a similar case decided by the Chennai Bench, where the Tribunal set aside the Commissioner's order on identical grounds. The Tribunal in the Chennai case found no intention to evade duty as all declarations were filed and allowed modvat credit, setting aside penalties. The Counsel argued that this precedent applied to the present case, citing another judgment supporting the assessees' entitlement to credit for similar goods. After careful consideration, the Tribunal found the Commissioner's order just and proper, noting that previous Tribunal judgments supported modvat credit eligibility for the goods in question. The Tribunal rejected the Revenue's appeals, citing the consistency of previous rulings with the facts of the case.

In conclusion, the Tribunal upheld the Commissioner's decision to drop proceedings against the assessees, finding no merit in the Revenue's appeals. The Tribunal based its decision on the eligibility of modvat credit for the capital goods and generating sets in question, supported by previous Tribunal judgments and the absence of fraudulent intent or suppression. The Tribunal's decision aligned with the principles established in similar cases, leading to the rejection of the Revenue's appeals.