2003 (10) TMI 166 - AT - Central Excise

Cenvat/Modvat - Capital goods - Ownership of capital goods - duty demand - HELD THAT - In view of the facts, the only point remains to be decided is whether the movement of goods to the factory premises of appellant No. 2, through the factory premises of appellant No. 1, will make them ineligible for the Modvat credit. The Appellate Tribunal has held in the case of Mark Auto Industries Ltd. 2002 (12) TMI 161 - CEGAT, NEW DELHI that the Modvat credit can be availed of on the basis of endorsement made on the Bill of Entry, which has been duly approved by the Customs authorities relying upon the Board's Circular dated 29-2-1996. In our view, the mere delay in sending the goods directly to the premises of appellant No. 2 should not come in the way of availing the Modvat credit when all other formalities, as required under the Board's Circular, have been complied with. The learned Advocate has also relied upon the decision of the Tribunal in the case of German Remedies Ltd. 2002 (4) TMI 140 - CEGAT, MUMBAI wherein it has been held that the requirement of direct purchase and transfer of property in the name of the manufacturer (appellant No. 2) were not prerequisite condition for allowing the credit. Thus, following the ratio of these decisions, we hold that appellant No. 2, is eligible to take Modvat credit of the duty paid on dyes and fixtures by M/s. Maruti Udyog Ltd. Consequently, no penalty is imposable on M/s. Maruti Udyog Ltd. We, therefore, allow both the appeals.

Summary

Issues Involved: Availability of Modvat credit of duty paid on capital goods imported by M/s. Maruti Udyog Ltd. and sent to M/s. Agro Engg. Works.

Summary:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the availability of Modvat credit of duty paid on capital goods imported by M/s. Maruti Udyog Ltd. and sent to M/s. Agro Engg. Works. The dispute arose from the Commissioner's Order-in-Original regarding the Modvat credit.

Arguments by Shri B.L. Narasimhan:
Shri B.L. Narasimhan, representing M/s. Agro Engg. Works, argued that the imported goods were meant for supply to them, and the necessary procedures were followed as per Board's Circular No. 179/13/96-CX. He cited precedents where credit could be taken based on the endorsed Bill of Entry. He emphasized that ownership of capital goods is not a prerequisite for availing Modvat credit.

Arguments by Sh. D.N. Choudhary:
Sh. D.N. Choudhary, representing the Revenue, contended that the goods were not diverted to M/s. Agro Engg. Works immediately, and there was a lack of separate duty-paying documents for availing Modvat credit. He argued that the goods were not sold or cleared on lease before reaching M/s. Agro Engg. Works.

Tribunal's Decision:
After considering both arguments, the Tribunal noted that the goods were endorsed for M/s. Agro Engg. Works but initially went to M/s. Maruti Udyog Ltd.'s premises before reaching the intended recipient. The Tribunal found that all formalities for availing Modvat credit were met, despite the delay in direct delivery. Relying on precedents, the Tribunal held that M/s. Agro Engg. Works was eligible for the Modvat credit, and no penalty was imposed on M/s. Maruti Udyog Ltd. The appeals were allowed based on these findings.