1999 (1) TMI 545 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on capital goods under Rule 57Q, 57R, and 57T of the Central Excise Rules, 1944.
2. Disallowance of credit by the Assistant Commissioner of Central Excise.
3. Appeal filed by the assessee with the Commissioner (Appeals) and subsequent decision.
4. Infirmities in the Order-in-Appeal as raised by the Revenue.
5. Arguments presented by both sides regarding various issues.
6. Consideration of submissions and records by the Member (J).
7. Analysis of credit on original documents and rubber stamped invoices.
8. Examination of credit on machines used for manufacturing products.
9. Modifying the Order-in-Appeal and remanding the matter for verification.

Detailed Analysis:

1. The case involved the denial of Modvat credit on capital goods by the jurisdictional Range Officer under Rules 57Q, 57R, and 57T of the Central Excise Rules, 1944. The show cause notice alleged violations related to the usage of original invoices and xeroxed documents for claiming credit, as well as the utilization of certain capital goods not specified for credit prior to a specific date.

2. The Assistant Commissioner of Central Excise disallowed a portion of the credit claimed by the assessee but allowed a part of it as eligible in his order-in-original. This decision led to the filing of an appeal by the assessee with the Commissioner (Appeals), Trichy.

3. The Commissioner (Appeals) allowed the appeal filed by the assessee, deciding on various issues such as proportionate credit for the use of capital goods, verification of original invoices, and credit on non-pre-printed invoices after due verification by the Assistant Commissioner.

4. The Revenue raised several infirmities in the Order-in-Appeal, including the incorrect interpretation of rules regarding preparatory machines and their spares, the scope of Rule 57-S, and the validity of extending credit based on original invoices.

5. Arguments were presented by both sides, with the Revenue contesting the Commissioner (Appeals)'s decision on various grounds, while the respondent's consultant defended the allowance of credit based on original invoices and disputed the Revenue's contentions.

6. The Member (J) carefully considered the submissions and records of the case, focusing on issues related to credit on original documents, rubber stamped invoices, and the eligibility of machines for claiming credit under Rule 57T.

7. Regarding the credit on machines used for manufacturing products, the Member (J) analyzed the applicability of the Singaravelar Spinning Mills case and emphasized the significance of the term "exclusively" in determining the eligibility for Modvat credit.

8. The Order-in-Appeal was modified to set aside the credit allowed on a pro-rata basis and remanded the matter to the original authority for verification. If the subject capital goods were used for manufacturing dutiable synthetic yarn, full credit would be allowed based on the verification by the Assistant Commissioner.

9. The decision concluded by disposing of the Revenue appeal accordingly, emphasizing the need for verification and adherence to the rules for claiming Modvat credit on capital goods.