2001 (3) TMI 365 - Commissioner - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit under Rule 57-I and imposition of penalty under Rule 173Q.

Analysis:
The appellant, a company manufacturing motor vehicle parts, appealed against the disallowance of Modvat credit and imposition of a penalty by the Assistant Commissioner of Central Excise. The appellant contended that the goods were eligible for credit under Rule 57Q(3) due to a non obstante clause, and argued that restrictions under sub-rule (1) of Rule 57(Q) did not apply to credit on project input goods. The appellant also claimed that the goods could be classified under a different category, making them eligible for credit. The matter was heard, and the key question was whether capital goods imported under project import were eligible for Modvat credit.

Upon examination of the case records, it was found that the appellant had reversed credit for one item and was contesting the credit for the remaining items imported under project import. The goods in question were classified under CSH 9801.00. Referring to Rule 57Q(3), it was concluded that goods imported under project import and classified under CSH 98.01 were eligible for 75% of the additional duty paid as Modvat credit. It was clarified that classification of each imported product was not necessary under project import.

As the goods in question were imported under project import and the relevant duty was paid under CSH 9801.00, it was held that they were eligible for Modvat credit under Rule 57Q(3). The lower authority was directed to extend the credit after verification, and the penalty imposed under Rule 173Q was vacated. Consequently, the impugned order was set aside, and the appeal was allowed.