2015 (1) TMI 804 - HC - Central Excise

Modvat / Cenvat Credit - eligible capital goods - parts of materials conveying equipments falling under Chapter Heading 84.28. - Held that - Following decision of assessee s own previous case 2013 (8) TMI 576 - MADRAS HIGH COURT - Decided against Revenue.

Summary

Issues:
1. Interpretation of Notification No.25/96-C.E. (N.T.) dated 31.08.1996 regarding eligibility of capital goods.
2. Whether the Notification is retrospective and clarificatory.
3. Application of Rule 57Q of Central Excise Rules for availing modvat credit.

Issue 1: Interpretation of Notification No.25/96-C.E. (N.T.) dated 31.08.1996 regarding eligibility of capital goods:
The High Court considered the appeal challenging the Appellate Tribunal's order. The Court framed substantial questions of law regarding the correct interpretation of the notification. The Tribunal had treated goods specified under 84.74 as eligible capital goods during a specific period. The Court referred to a judgment in India Cements Ltd. case, where a similar issue was decided against the Revenue. The Court analyzed the interpretation of capital goods and their eligibility under the relevant notification.

Issue 2: Whether the Notification is retrospective and clarificatory:
The Court discussed whether the Notification No.25/96-C.E. (N.T.) dated 31.08.1996 should be considered retrospective and clarificatory. Referring to previous judgments, the Court examined the application of the notification and its impact on the eligibility of goods as capital goods. The Court considered the literal rule of interpretation and the clarity of the scope of capital goods to determine the retrospective nature of the notification.

Issue 3: Application of Rule 57Q of Central Excise Rules for availing modvat credit:
The Court analyzed the application of Rule 57Q of Central Excise Rules for availing modvat credit. Referring to a Division Bench decision in a similar case, the Court discussed the classification of goods under different headings and the eligibility for modvat credit. The Court examined the liberal interpretation given to Rule 57Q and the implications of the circular issued by the Government of India. Based on the interpretation of relevant provisions and previous judgments, the Court granted relief in favor of the assessee and set aside the Tribunal's order.

In conclusion, the Court dismissed the appeal based on the previous judgment in India Cements case and answered the substantial questions of law accordingly. The judgment provided a detailed analysis of the issues related to the interpretation of the notification, its retrospective nature, and the application of Rule 57Q for availing modvat credit.