2005 (6) TMI 177 - AT - Central Excise

Summary

Issues involved: Eligibility of Modvat credit of duty paid on inputs and capital goods used in the manufacture of Soda Ash falling under Chapter 28 of the Central Excise Tariff Act, 1985.

The judgment by the Appellate Tribunal CESTAT, Mumbai dealt with the eligibility of Modvat credit of duty paid on inputs and capital goods used in the manufacturing process of Soda Ash. The period in question was before 23-7-1996. One of the grounds for disallowing credit was the discrepancy in the address on the bills of entry or invoices and the actual destination of the goods. The Commissioner's decision was based on a CBEC Circular from 14-5-1996, which required the consignment to be transferred to the manufacturing unit and the duty documents to be endorsed by the registered office. However, the appellants provided evidence that the goods were indeed consigned to the factory in question, and the circular was issued after the period in dispute. The Tribunal found no valid reason to deny credit on this ground and set aside the denial. Additionally, the credit on Ion Exchange Resin was deemed admissible based on previous Tribunal decisions regarding the classification of chemicals as inputs.

Another ground for denial of credit was the absence of pre-printed serial numbers on the invoices. However, Rule 57G(11) stipulated that credit should not be denied solely for this reason as long as other necessary details were present, as clarified by a Circular from the Central Board of Excise and Customs. The Tribunal's decision in Kamani Tubes Ltd. v. Commissioner of Central Excise also supported the admissibility of credit even without pre-printed serial numbers, leading to the conclusion that credit cannot be denied on this basis.

Furthermore, the credit on the Lubricating System was considered admissible under the definition of capital goods, as explained in Rule 57Q and supported by previous Tribunal orders. The denial of credit on this item was set aside. Lastly, the Tribunal held that credit on parts of the Conveyor Roller Chain was admissible as they were considered part of material handling equipment, falling under the definition of capital goods. This decision was supported by previous case law, leading to the allowance of credit on the entire items in question and the dismissal of penalties.