2012 (12) TMI 220 - AT - Central Excise

Admissibility of cenvat credit - cenvat credit demand in respect of MS angles, Channels, CTD bars, sheets etc. used for fabrication and erection of supporting structures of the machinery, this credit has been taken during Nov. 1994 - August 1995 period Held that - With effect from 16-3-1995 goods of chapter 73 were not mentioned in the new definition. The eligibility of capital goods modvat credit of M.S. angles, channels, sections, CTD bars etc. used for fabricating and erecting supporting structures for machinery has to be examined on the basis of definition of capital goods - portion of the impugned order disallowing Modvat credit in respect of MS Angles, Channels, Sections, bars, etc. used for supporting structures for machinery for the period prior to 16-3-1995, is set aside and the portion of the order disallowing the Modvat credit in respect of these items for the period w.e.f 16-3-1995 is upheld - appeal partly allowed

Issues Involved:
1. Admissibility of Modvat credit on capital goods under Rule 57Q of Central Excise Rules, 1944.
2. Validity of Modvat credit taken without valid documents.
3. Eligibility of Modvat credit on structural steel items used for supporting structures.
4. Determination of Modvat credit on items from Chapters 73 and 84 of the Central Excise Tariff.

Issue-wise Detailed Analysis:

1. Admissibility of Modvat credit on capital goods under Rule 57Q of Central Excise Rules, 1944:
The appellant, a manufacturer of sugar, availed Modvat credit on various items of capital goods during the period from November 1994 to August 1995. The Assistant Commissioner initially disallowed Modvat credit of Rs. 48,14,702/- on the ground that the items were not covered by the definition of 'capital goods' under Rule 57Q. The Tribunal, in its Final Order dated 29-6-2001, set aside this disallowance and remanded the matter for de novo adjudication in light of the Larger Bench decision in CCE, Indore v. Surya Roshini Ltd. During subsequent rounds of adjudication, the Deputy Commissioner and the CCE (Appeals) issued conflicting orders regarding the eligibility of these items. The Tribunal, in its final analysis, upheld the eligibility of the items as 'capital goods' for the period prior to 16-3-1995, based on the definition that included "plant," which covered supporting structures for machinery.

2. Validity of Modvat credit taken without valid documents:
The Assistant Commissioner disallowed Modvat credit of Rs. 4,99,229/- on the ground that it was taken without valid documents. This disallowance was consistently upheld through various stages of adjudication, including the Tribunal's Final Order dated 29-6-2001 and subsequent orders. The Tribunal, in its final judgment, confirmed the modvat credit demand of Rs. 4,99,229/- as already upheld by the Tribunal's earlier order.

3. Eligibility of Modvat credit on structural steel items used for supporting structures:
The Deputy Commissioner, in the third round of de novo adjudication, dropped the demand of Rs. 20,71,103/- in respect of MS Angles, Channels, CTD Bars, etc., used for supporting structures, following the Tribunal's earlier orders. However, the CCE (Appeals) restored this demand, arguing that the judgments cited by the Tribunal were not applicable to the definition of 'capital goods' for the period in question. The Tribunal, in its final judgment, referred to the Larger Bench decision in Jawahar Mills Ltd. v. CCE, Coimbatore, which held that supporting structures for machinery are covered by the term "plant" and thus eligible for Modvat credit. Consequently, the Tribunal set aside the impugned order denying Modvat credit for the period prior to 16-3-1995 but upheld the disallowance for the period from 16-3-1995 onwards.

4. Determination of Modvat credit on items from Chapters 73 and 84 of the Central Excise Tariff:
The dispute over Modvat credit of Rs. 1,02,237/- and Rs. 42,065/- on items from Chapters 73 and 84 centered on the availability of duty-paying documents. The Tribunal noted that the CCE (Appeals) had previously reduced these demands to Rs. 41,775/- and Rs. 38,815/- respectively, after examining the records. In the final judgment, the Tribunal agreed with this reduction and upheld the demands of Rs. 41,775/- and Rs. 38,815/-.

Conclusion:
The Tribunal's final judgment partly allowed the appeal, providing consequential relief. It upheld the eligibility of Modvat credit on supporting structures for the period prior to 16-3-1995, confirmed the disallowance for the period from 16-3-1995 onwards, and upheld the reduced demands for items from Chapters 73 and 84. The Tribunal also confirmed the disallowance of Modvat credit taken without valid documents.

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