2021 (2) TMI 809 - HC - Central Excise

Recovery of MODVAT Credit - Capital goods or not - H.R. Plates/Coils - used in construction of platform for Conveyor Gallaries - whether can be regarded as machine, machinery, plant, equipments apparatus, tools, or appliances or their components spare parts and accessories specified at Explanation I (a), (b) or any other goods specified at Explanation 1(c) or 1(d) or 1(e) to Rule 57-Q or not? - immovable property being a non excisable goods attached to earth or not - penalty under Rule 173Q of erstwhile Central Excise Rule 1944. HELD THAT - The Division Bench of this Court in M/S MANIKGARH CEMENT (A DIVISION OF CENTURY TEXTILES INDUSTRIES LIMITED) VERSUS THE COMMISSIONER OF CUSTOMS CENTRAL EXCISE 2017 (8) TMI 829 - BOMBAY HIGH COURT found that the Authority had not rendered a factual finding as to the manner of use of manufacturing of final products in respect of the capital goods claimed by the Assessee therein. It is in that context the Division Bench remanded the proceedings to the Authority. In the present case, going by the test laid down in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2015 (4) TMI 569 - SUPREME COURT whether such capital goods are utilized for the purpose of manufacturing of final products, a finding of fact has to be rendered in respect of the each of the manufacturing process. The question of law as framed treats all construction as the same position of law, which it is not. The Commissioner in the present case considered the use of H.R.Plates/Coils by the Respondent-Assessee and has recorded a finding that these H.R.Plates/Coils used as a component for platform of conveyor gallery in the aid of completion of manufacturing process. Therefore, the present manufacturing process is held to be used for producing the goods. The Commissioner has found that the Capital Goods in question are utilized for the purpose of manufacturing of final products. Appeal dismissed.

Summary

Issues:
1. Appeal against order passed by Central Excise Appellate Tribunal.
2. Availing Modvat Credit on Hot Rolled Plates (H.R. Plates) and Coils.
3. Interpretation of Rule 57-Q of Central Excise Rules, 1944.
4. Entitlement to avail Modvat Credit on capital goods.
5. Imposition of penalty under Rule 173Q of Central Excise Rule, 1944.

Analysis:
1. The appeal was filed by the Commissioner, Central Excise, Nagpur against the order of the Central Excise Appellate Tribunal confirming the Modvat Credit availed by the Respondent-Assessee on Hot Rolled Plates and Coils under Rule 57-Q of the Central Excise Rules, 1944. The Tribunal relied on its previous order and dismissed the appeal, leading to the current challenge.

2. The Respondent, engaged in manufacturing of sponge iron, availed Modvat Credit on H.R. Plates and Coils in March-April 1995. The dispute arose regarding the classification of these items as 'Capital Goods' under Rule 57-Q. The Commissioner allowed the Modvat Credit, but the Appellant-Department contested this decision, leading to the appeal.

3. The key issue revolved around the interpretation of Rule 57-Q of the Central Excise Rules, 1944, specifically whether H.R. Plates/Coils used in the construction of a platform for Conveyor Galleries could be considered as capital goods as per the rule. The Tribunal's decision was challenged based on this interpretation.

4. The Appellant argued that the Tribunal's decision was based on a previous ruling that was subsequently affected by new judgments, particularly the decision in Jayaswal Neco Ltd. v. Commnr. of Central Excise, Raipur. The Appellant contended that the Respondent was not entitled to avail Modvat Credit on the capital goods based on the criteria set by the Apex Court in the mentioned case.

5. Finally, the issue of penalty under Rule 173Q of the Central Excise Rule, 1944 was raised. The Appellant questioned the correctness of not imposing a penalty, especially considering the misuse of Modvat credit. However, the Court dismissed the appeal, emphasizing the factual findings regarding the use of capital goods in the manufacturing process and the lack of substantial legal questions for consideration based on the established law.

This detailed analysis covers the various issues involved in the legal judgment, addressing the arguments presented and the ultimate decision rendered by the High Court.