2000 (2) TMI 428 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57A and 57Q of the Central Excise Rules regarding Modvat credit eligibility for "Forklift Truck" as an input.
2. Determination of whether "Forklift Truck" qualifies as an input for the manufacture of compressors and parts thereof under Chapter sub-heading 8418 and 8414 of the Central Excise Tariff Act.

Analysis:
1. The appellant, engaged in business in Mumbai, was charged with wrongly availing Modvat credit for a "Forklift Truck" under Rules 57A and 57G of the Central Excise Rules. The Show Cause Notice alleged a violation of these provisions, which the Addl. Commissioner initially dropped following precedents from the Supreme Court and Tribunal. However, the Commissioner (Appeals) reversed this decision, stating that the "Forklift Truck" did not qualify as an input for manufacturing compressors. The appellant appealed this decision, arguing for Modvat credit eligibility based on previous judgments in their favor.

2. During the proceedings, the appellant's counsel highlighted previous Tribunal judgments favoring Modvat credit eligibility for a "Forklift Truck." The Department's Representative argued that the truck should fall under Rule 57Q, not 57A, as it was not directly used in the manufacturing process. The Judge analyzed the arguments, emphasizing the need to consider both Rule 57A and 57Q for Modvat credit. However, the Judge deemed Rule 57Q irrelevant in this case due to the absence of its mention in the Show Cause Notice.

3. The Judge referred to a previous judgment in the appellant's own case, where it was established that the "Forklift Truck" qualified as an input for moving goods within and outside the factory. The Judge dismissed the Department's arguments, stating that the Show Cause Notice lacked the necessary evidence for the Department's case. Relying on the previous Tribunal decision in the appellant's favor, the Judge allowed the appeal, overturning the Commissioner (Appeals) decision and granting relief to the assessee as per the law.

4. Ultimately, the appeal was allowed in favor of the appellant, setting aside the Commissioner (Appeals) order. The Judge emphasized the importance of laying a foundation in the Show Cause Notice for quasi-judicial proceedings, which was missing in this case. The decision was based on the appellant's entitlement to Modvat credit for the "Forklift Truck" as an input, as established in previous judgments and the absence of evidence supporting the Department's case.

5. The Stay petition was also disposed of in light of the appeal decision, providing consequential relief as per the law.