2001 (7) TMI 240 - AT - Central Excise

Summary

Issues: Denial of Modvat credit for lubricating oils and greases, denial of credit for delayed invoice, denial of credit for portion of electricity consumed in residential premises.

In the present case, the main issue revolves around the denial of Modvat credit to the appellants for lubricating oils and greases for the period July to September 1997. The authorities below rejected the credit on the basis that the appellants claimed them as inputs under Rule 57A, while they were considered capital goods under Rule 57Q from March 1997 onwards. The appellants argued that they had previously filed a declaration under Rule 57G claiming these items as modvatable inputs and referred to a Tribunal decision supporting their claim. The Tribunal found merit in the appellants' submissions, noting that lubricating oils were eligible under Rule 57A and Rule 57Q covered them from March 1997. As there was already a declaration under Rule 57G, the Tribunal held that Modvat credit for lubricants should not be denied based on the technicality of not filing a separate declaration under Rule 57T.

Another issue raised was the denial of credit amounting to Rs. 1,15,560 due to a delay in availing it after six months from the invoice date. The appellants argued that this restriction did not apply to capital goods, citing a Tribunal decision and a Board's Circular exempting capital goods from the time limit. Considering these arguments and the absence of a time limit under Rule 57T during the relevant period, the Tribunal held that denying the credit of Rs. 1,15,560 was unjustified.

Additionally, a smaller credit amount of Rs. 5,674 was disallowed because a portion of electricity was consumed in the appellants' residential premises. The appellants did not contest this disallowance, and the Tribunal upheld this portion of the order confirming the demand.

In conclusion, except for the amount of Rs. 5,674, the Tribunal set aside the impugned orders and allowed the appeal, providing consequential relief to the appellants. The penalty of Rs. 1,00,000 was also set aside in favor of the appellants.