2001 (5) TMI 128 - AT - Central Excise

Summary

Issues:
Challenge to Order-in-Appeal allowing Modvat credit on capital goods purchased before 21-10-94, classification of carded/combed cotton, legal backing for disallowing credit, retrospective effect of Notification No. 60/94, remand for de novo consideration.

Analysis:
The Revenue challenged the Order-in-Appeal allowing Modvat credit on capital goods purchased before 21-10-94, citing Notification No. 60/94's prospective effect and ineligibility for credit under Rule 57Q. The appellate Authority's view on disallowing credit lacked legal backing, drawing an analogy from Rule 57S. The Tribunal, in a similar case, remanded for de novo consideration due to the issue's similarity with the present appeal. Both parties agreed to remand the matter for reconsideration.

The Revenue contested the Order-in-Appeal regarding capital goods entitled to Modvat credit under Notification No. 23/94, emphasizing that the impugned goods were not eligible for credit under Rule 57Q before 21-10-94. The Revenue argued against the proportionate credit granted by the CCE (A) and challenged the inclusion of preparatory machines/spare parts as capital goods. The matter was remanded for reconsideration to determine the eligibility of Modvat credit.

The Counsel for the respondents argued that Notification No. 60/94 had retrospective effect, supported by Circular No. 72/94. Referring to precedents, the Counsel contended that Modvat credit should be granted based on the functions of the machines involved in the manufacturing process. The Counsel emphasized the clarificatory nature of the Notification and applied the mischief rule principle to support their case. The Tribunal was urged to dismiss the Revenue's appeals.

The SDR maintained that the Notification did not have retrospective effect and distinguished the cited precedents. Referring to relevant judgments, the SDR argued against the retrospective application of the Notification. Considering the arguments presented, the Tribunal accepted the plea for remand based on previous cases and directed de novo consideration, emphasizing the need to assess the matter in light of relevant judgments and written submissions.

In conclusion, the Tribunal set aside the impugned order and remanded the matter for de novo consideration, aligning with the principles established in previous judgments. The Tribunal emphasized the need for a thorough reevaluation of the case in accordance with the law and the arguments presented by both parties. The appeals and cross-objections were allowed by remand to the original authority for further consideration.