2004 (8) TMI 217 - AT - Central Excise

Summary

Issues:
1. Eligibility of credit on storage tanks based on filing of declaration.
2. Grant of credit for nitrogen consumption in manufacturing process.
3. Interpretation of rules regarding credit on storage tanks and nitrogen plant.
4. Imposition of penalty for procedural non-compliance.

Analysis:
1. The first issue pertains to the eligibility of credit on storage tanks based on the filing of a declaration. The Commissioner granted the credit to the assessee for nitrogen consumption, stating that the goods were received, installed, and met the requirements despite some errors. The Revenue appealed, arguing that nitrogen was not an intermediate product and was excisable at a nil rate of duty. They also contended that the storage tanks were not specified under Rule 57Q. However, the Tribunal found that storage tanks were essential components of the plant for storing nitrogen gas, making them eligible for credit. The Commissioner's decision to grant credit and impose a penalty was upheld.

2. The second issue revolves around the grant of credit for nitrogen consumption in the manufacturing process. The Commissioner analyzed the manufacturing process and concluded that nitrogen gas was a vital input for producing pipes. The Tribunal agreed that if a process of manufacture required nitrogen gas, the assessee would be eligible for credit on capital goods producing such nitrogen. The objection regarding the lease agreement not being with a Financial Company was overruled, as the leasing company had not claimed depreciation under Income Tax Law. The Tribunal found no merit in the Revenue's argument against granting credit on the nitrogen plant as capital goods.

3. The third issue involves the interpretation of rules regarding credit on storage tanks and nitrogen plants. The Tribunal clarified that storage tanks were eligible capital goods as essential components of the plant for storing nitrogen gas. The Commissioner's decision to grant credit and impose a penalty for procedural non-compliance was upheld, as the credit could not be denied solely based on procedural aspects.

4. Lastly, the imposition of a penalty for procedural non-compliance was considered. The Tribunal found the penalty of Rs. 1,000 imposed by the Commissioner to be sufficient. The Commissioner's findings on credit eligibility, documentation, and compliance with general description requirements were upheld. The Tribunal dismissed the appeal of the Revenue, affirming the Commissioner's decision.

In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the Commissioner's decision to grant credit on storage tanks and nitrogen consumption, while also imposing a penalty for procedural non-compliance.