2010 (8) TMI 281 - HC - Central Excise

Cenvat credit capital goods - Penalty classification - Tribunal classified product under 84.28 and according to appellant under 84.29 - when it is not in dispute that the manufacturer declared the product as one falling under shovel loader under the heading 84.29 there is no scope for any other authority to classify the same under any other heading - Shovel loader is one of the specific product under the heading 84.29 - product falling under 84.29 had been specifically excluded for the purpose of availing MODVAT credit credit not allowed no case for imposition of penalty

Summary

Issues:
1. Whether the second respondent was correct in allowing MODVAT benefits for a product classified under the excluded item of sub-heading 8429.00 under Rule 57-Q and the annexed table.

Analysis:
The case involved a dispute regarding the eligibility of MODVAT benefits for a product classified under sub-heading 8429.00, which was specifically excluded for the grant of such benefits under Rule 57-Q and the table annexed to it. The appellant contended that the Tribunal erred in reclassifying the product under a different heading, arguing that the product, a shovel loader, fell under 84.29 and not 84.28 as claimed by the authorities. The appellant relied on legal precedents to support their argument that the classification provided by the manufacturer should be upheld. On the other hand, the respondent argued that the product could be considered under other accessories based on the table annexed to Rule 57-Q, citing relevant legal decisions to support their position.

The Court analyzed the submissions and referred to a Supreme Court decision which clarified that the classification declared by the manufacturer should be respected unless there are valid reasons to reclassify. The Court noted that the product, a shovel loader, clearly fell under heading 84.29, which was specifically excluded for MODVAT credit. The Court emphasized that the specific exclusion of products under heading 84.29 to 84.37 for MODVAT credit meant that the credit availed by the respondent for the shovel loader could not be allowed. The Court rejected the respondent's alternate argument based on clause 5 of the table annexed to Rule 57-Q, stating that specific exclusions for claiming MODVAT credit cannot be circumvented.

Additionally, the Court distinguished another Supreme Court decision cited by the respondent, emphasizing that the circumstances of that case were different as the items in question were not specifically excluded for MODVAT credit. Ultimately, the Court concluded that the Tribunal's order was not in accordance with the law. The substantial question of law was answered against the assessee in favor of the Revenue, setting aside the Tribunal and Commissioner Appeals' orders and restoring the original authority's decision. The Court also ruled out imposing a penalty in this case.