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2015 (11) TMI 954 - HC - Central ExciseModvat/Cenvat credit - use of Capital goods outside the factory premises - Whether the amended Notification No.25/96-CE (NT) dated 31.08.1996 is clarificatory and therefore restorative in nature or not? - Held that - Court, in the earlier batch of appeals, pertaining to the very same assessee, found that the Tribunal has not gone into the issue whether the capital goods were utilised in the own factory of the assessee or in an integrated mine of the assessee or in other mines. Therefore the matter was remanded to the Original Authority for reconsideration of the claim of the assessee in the light of the decision in Vikram Cement case (2006 (2) TMI 1 - Supreme court). - there is no finding as to whether the capital goods were utilised in the own factory of the assessee or in an integrated mine of the assessee or in other mines, this Court, without going into the other questions of law as raised by the appellant, is inclined to set aside the impugned orders and remand the matter back to the Original Authority for reconsideration. - Decided in favour of assessee.
Issues Involved:
1. Interpretation of Notification No.25/96-CE (NT) dated 31.08.1996 2. Denial of Modvat credit on capital goods due to apparent shortage 3. Disallowance of credit on specific capital goods under Central Excise Tariff Act 4. Denial of credit on tyres and tubes used in captive mines Issue 1: Interpretation of Notification No.25/96-CE (NT) dated 31.08.1996 The appellant contested the denial of Modvat credit on capital goods received between 23.7.96 and 31.8.96, arguing that Notification No.25/96-CE (NT) was clarificatory and retrospective. The Tribunal rejected this argument based on a previous Final Order and dismissed the appeal. The High Court, following its own precedent and relying on India Cements Ltd. case, held that the notification was indeed retrospective and clarificatory, ruling in favor of the appellant. Issue 2: Denial of Modvat Credit on Capital Goods The appellant sought Modvat credit on capital goods used in their cement manufacturing factory and captive mines. The Department issued show cause notices disallowing the credit, which were upheld by the Commissioner (Appeals) and the Appellate Tribunal. However, the High Court referred to previous decisions and circulars, including the Apex Court's rulings in Vikram Cement cases, to establish that if capital goods are used in captive mines, the assessee is entitled to Modvat credit. The Court overturned the Tribunal's decision and granted relief to the appellant. Issue 3: Disallowance of Credit on Specific Capital Goods The Tribunal disallowed credit on components, spares, and accessories of cement manufacturing machinery received by the appellant during a specific period. The Tribunal relied on a Final Order and rejected the appellant's argument regarding the retrospective nature of Notification No.25/96. The High Court, however, analyzed relevant legal provisions and circulars, concluding that the capital goods were eligible for Modvat credit under Rule 57Q, setting aside the Tribunal's decision. Issue 4: Denial of Credit on Tyres and Tubes Used in Captive Mines The Tribunal sought to deny credit on tyres and tubes used in captive mines, citing a Supreme Court decision in Jaypee Rawa Cements case. The High Court noted the Supreme Court's subsequent rulings in Vikram Cement cases and Madras Cements Ltd. case, emphasizing that Modvat credit on capital goods used in captive mines is permissible. As there was no finding on the specific usage of capital goods in the appellant's case, the matter was remanded back to the Original Authority for reconsideration in line with the Supreme Court decisions. In conclusion, the High Court addressed each issue comprehensively, interpreting legal provisions, referring to relevant precedents, and ensuring a just resolution in favor of the appellant on the interpretation of the notification, entitlement to Modvat credit on capital goods, and denial of credit on specific items used in captive mines.
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