2017 (6) TMI 1104 - HC - Central Excise

MODVAT credit - whether, the appellant was entitled to Modvat credit on spares, components and accessories of machines, i.e., capital goods, falling under Heading 84.74 of the Central Excise Tariff Act, 1985, for the period, spanning between 23.07.1996 and 31.08.1996? - Held that - the issue raised in the appeal, is, squarely covered by the judgment of the Division Bench rendered in India Cements Limited V. Commissioner of Central Excise, Trichy 2013 (8) TMI 576 - MADRAS HIGH COURT , where it was held that Commissioner Of Central Excise, Jaipur Versus M/S Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , in the background of the circular issued by the Government of India has held that the benefit of modvat credit under Rule 57Q would be applicable to all components, spares and accessories of the specified goods, irrespective of their classification under any chapter heading - petition allowed - decided in favor of assessee.

Summary

Issues:
1. Condonation of delay in filing an appeal.
2. Interpretation of Modvat credit on spares, components, and accessories of machines under the Central Excise Tariff Act, 1985.

Analysis:

Issue 1: Condonation of Delay
The Court noted the condonation of delay in filing an appeal, leading to the numbering of the appeal and its accompanying case for hearing. The Court proceeded to address the issues raised in the appeal, which were considered narrow in scope but crucial for the decision.

Issue 2: Interpretation of Modvat Credit
The primary issue before the Court was the entitlement of the appellant to Modvat credit on spares, components, and accessories of machines falling under Heading 84.74 of the Central Excise Tariff Act, 1985, for a specific period. The appellant's claim was based on their understanding of relevant notifications and circulars, asserting that Modvat credit should be available regardless of the classification under Heading 84.74. The appellant's position was supported by a Division Bench judgment in a similar case.

The Revenue contended that the issue was covered by the Division Bench judgment and opposed the appellant's claim. The Court extensively analyzed the legislative history and amendments to Rule 57Q, emphasizing the exclusion of goods falling under Heading 84.74 from the definition of capital goods eligible for Modvat credit under certain notifications.

The Court referred to a circular clarifying the availability of Modvat credit on components, spares, and accessories, irrespective of their classification under any chapter heading. Relying on previous court decisions and the circular, the Court concluded in favor of the appellant, granting relief and setting aside the Tribunal's order. The Court held that the benefit of Modvat credit should apply to all components, spares, and accessories of specified goods, irrespective of their classification.

In the final judgment, the Court answered the questions raised in favor of the Assessee due to the conclusion reached on merits. The Court disposed of the appeals with no order as to costs, closing the connected miscellaneous petitions.