1998 (6) TMI 337 - AT - Central Excise

Summary

Issues:
Dispensing with pre-deposit of duty and penalty based on wrongly availed Modvat credit, denial of Modvat credit by Commissioner, registration under Central Excise Rules, submission of RT 12 returns, eligibility of storage tanks as capital goods for Modvat credit under Rule 57Q.

Analysis:
The judgment pertains to applications seeking dispensation of pre-deposit of duty and penalties amounting to Rs. 1,26,11,564 and Rs. 30.00 lakhs respectively, on the grounds of wrongly availed Modvat credit. The applicants argued that the denial of Modvat credit by the Commissioner was unjust as they had applied for registration under Central Excise Rules on 6-12-1994, in accordance with Rule 174. They highlighted that the Commissioner's finding regarding the timing of Modvat declaration filings was erroneous, as they had been submitting declarations regularly. Additionally, the contention that storage tanks were not eligible for Modvat credit was disputed, citing previous Tribunal decisions supporting the eligibility of tanks as capital goods under Rule 57Q. The Tribunal also referenced Circular No. 88/8894-CX, emphasizing that the manufacturer could claim credit for duty paid on capital goods even before the factory's establishment.

The Tribunal observed that the Commissioner had not considered the deeming provisions of Rule 174, which stated that if registration was not granted within 30 days, it would be deemed granted. Furthermore, the Circular clarifying the Modvat credit rules during the initial factory setup was not taken into account. The Tribunal found the applicant's case law supporting tanks as capital goods under Rule 57Q to be relevant and contradictory to the Commissioner's conclusion. Consequently, the Tribunal set aside the impugned order and remanded the case for fresh adjudication, directing the Commissioner to reconsider the matter in light of Rule 174 provisions and the Tribunal's decision on tanks as capital goods. The judgment granted a stay and emphasized the importance of ensuring justice in the adjudication process.

In conclusion, the Tribunal's decision focused on the proper application of Rule 174, the eligibility of storage tanks for Modvat credit, and the necessity for the Commissioner to reevaluate the case based on relevant legal provisions and precedents. The judgment aimed to uphold fairness and adherence to the law in the adjudication of duty and penalty matters related to Modvat credit.