2003 (9) TMI 279 - AT - Central Excise

Summary

Issues:
1. Denial of credit on Hardened and Tempered Steel Strips and Aluminium Ingots under Rule 57Q.
2. Eligibility of Steel Strips and Aluminium Ingots as capital goods or inputs under different rules.
3. Procedural lapses in filing revised declarations affecting credit eligibility.
4. Applicability of Rule 57D(2) for eligibility as capital goods.
5. Denial of credits by lower authority and subsequent penalty orders.

Analysis:

1. Denial of Credit under Rule 57Q:
The Commissioner (Appeals) denied credit on Hardened and Tempered Steel Strips and Aluminium Ingots under Rule 57Q. The Rule specified that only goods listed in Column No. 2 of the table could be considered capital goods. The criterion for deciding capital goods did not include discretion based on use for production or processing. As neither Steel Strips nor Aluminium Ingots were listed in Column No. 2, they were deemed ineligible for credit under Rule 57Q.

2. Eligibility of Steel Strips and Aluminium Ingots:
The Tribunal examined the table to Rule 57Q and found that goods falling under Chapter 84 were covered by specific serial numbers. Moulds, components, spares, and accessories were also specified as eligible capital goods. Since Steel Strips and Aluminium Ingots were used as components/accessories in the manufacturing process of Grinding Wheels, they were considered eligible capital goods despite not being specifically listed in the Tariff.

3. Procedural Lapses and Credit Eligibility:
The appellants failed to file revised declarations to rectify procedural lapses, which hindered the authorities from verifying their eligibility for credit under different rules. The Tribunal emphasized that benefits should not be denied for curable procedural lapses, but revised declarations were necessary to assess credit eligibility accurately.

4. Applicability of Rule 57D(2) for Capital Goods Eligibility:
Rule 57D(2) permitted eligibility as capital goods when items were manufactured into parts/components for eventual use in the premises. The Commissioner had overlooked this provision, leading to the incorrect denial of credits. The Tribunal cited a previous decision to support the appellants' eligibility for credit under Rule 57D(2).

5. Denial of Credits and Penalty Orders:
Once the Tribunal upheld the eligibility of Steel Strips and Aluminium Ingots as capital goods, arguments related to limitation, penalty orders, and previous decisions against the appellants could not be sustained. Consequently, the appeals were allowed, the previous order was set aside, and the stay application was disposed of in favor of the appellants.

In conclusion, the Tribunal overturned the denial of credit on Steel Strips and Aluminium Ingots, emphasizing their eligibility as capital goods under relevant rules and highlighting the importance of procedural compliance for claiming benefits.