2005 (7) TMI 229 - AT - Central Excise

Cenvat/Modvat - Capital goods used in off-factory mines - Non-filing of declaration - HELD THAT - In the case of Kamiakhya Steels 2000 (8) TMI 113 - CEGAT, NEW DELHI , the Larger Bench took note of the amendments brought to Rules 57G and 57T by Notification No. 7/99-C.E. (N.T.) as also the Board's clarification of the amendments and held to the effect that Modvat credit was not deniable on the sole ground of non-filing or belated filing of Modvat declaration where the substantive conditions for the credit were satisfied. The appellants are eligible for the benefit of the above amendments as well as the decision of the Larger Bench. In respect of item No. 6, credit was disallowed on the further ground that the words duplicate for transporter were not mentioned in the relevant invoices. There are decisions of the Tribunal against such denial of credit. In the result Modvat credit is held to be admissible to the appellants in respect of the capital goods mentioned at Sl. Nos. 2 to 6, 11 to 15 and 29. Capital goods mentioned at Sl. Nos. 32 to 43 are concerned, I do not find any good reason to interfere with the decision of the lower authorities. The assessee has claimed the benefit of the entry at Sl. No. 5 of the table annexed to 57Q(1) in respect of these goods. According to the said entry, parts, components and spares of capital goods mentioned at Sl. Nos. 1 to 4 of the said table were eligible for capital goods credit. The lower appellate authority also denied Modvat credit to the appellants on the capital goods used in off-factory mines. This grievance, however, has not been pressed by ld. Consultant in view of the Supreme Court's judgment in Jaypee Rewa Cement v. CCE 2001 (8) TMI 1332 - SUPREME COURT . The penalty of Rs. 1000/- imposed on the appellants by the lower authorities is vacated in the circumstances of this case.

Summary

Issues:
1. Denial of Modvat credit on specific capital goods for a certain period.
2. Eligibility of Modvat credit based on non-filing of declaration and procedural defects.
3. Eligibility of Modvat credit for capital goods used as spares.
4. Disallowance of Modvat credit for specific capital goods based on classification and identification.
5. Denial of Modvat credit on capital goods used in off-factory mines.
6. Imposition and vacation of penalty.

Analysis:

1. The lower appellate authority denied Modvat credit on certain capital goods due to non-filing of declaration. The appellant argued citing a Tribunal decision that credit should not be denied solely for this reason. The Tribunal agreed, stating that if substantive conditions for credit were met, denial based on non-filing alone was not justified. Modvat credit was allowed for the mentioned capital goods.

2. For another item, Modvat credit was disallowed due to a minor procedural defect in the invoices. The Tribunal disagreed with this denial, citing previous decisions against such disallowances. Modvat credit was deemed admissible for these capital goods as well.

3. Regarding capital goods used as spares, the appellant claimed eligibility based on a specific entry in the rules. However, the Tribunal found that the appellant failed to provide sufficient details about the machines/equipment these goods were accessories to. As a result, Modvat credit was not allowed for these capital goods.

4. The Tribunal upheld the decision of the lower authorities regarding the disallowance of Modvat credit for certain capital goods due to classification and identification issues. The appellant did not provide necessary details to claim credit under the relevant entry, leading to the denial of credit for these items.

5. Modvat credit was also denied for capital goods used in off-factory mines, but this issue was not pursued further by the appellant due to a Supreme Court judgment. The penalty imposed on the appellant was vacated in light of the circumstances.

6. In conclusion, the Tribunal allowed the appeal in part, holding that Modvat credit was admissible for specific capital goods while denying credit for others based on various grounds as discussed in the analysis.