2003 (12) TMI 682 - AT - Central Excise

Summary

Issues:
1. Whether credit can be taken under Rule 57Q for duty paid on moulds used in job work.
2. Interpretation of rules regarding ownership of capital goods for taking credit.
3. Applicability of Tribunal's decision in similar cases.
4. Validity of denying credit based on ownership of capital goods.

Analysis:
The appeal in question dealt with the issue of whether a manufacturer conducting job work using moulds owned by another party could claim credit under Rule 57Q for duty paid on those moulds. The Commissioner had disallowed the credit, imposed penalties, and ordered confiscation of the moulds, citing lack of ownership by the manufacturer. The appellant argued that ownership was not a mandatory criterion during the relevant period and relied on a Tribunal decision in German Remedies v. CCE, which supported their position. The departmental representative contended that this decision was not presented before the Commissioner.

The Tribunal analyzed Rule 57R(3) both before and after its amendment on 17.6.1994. Prior to the amendment, credit on capital goods not directly purchased by the manufacturer was prohibited. However, post-amendment, Sub-rule (3) allowed credit for capital goods acquired through lease, hire purchase, or loan, subject to specified conditions. The Tribunal concluded that this amendment did not restrict credit to goods acquired from finance companies only, but applied to any manner of acquisition specified in the rule. The Tribunal's decision in a similar case supported the appellant's entitlement to credit on goods received under a bailment agreement.

The Tribunal found that the denial of credit based solely on lack of ownership of the capital goods by the manufacturer was unsustainable. Consequently, the appeals were allowed, the impugned order was set aside, and consequential relief was granted in accordance with the law. This judgment clarifies the interpretation of rules regarding ownership of capital goods for claiming credit under Rule 57Q and emphasizes that ownership is not a decisive factor for credit eligibility in certain circumstances.