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TMI Blog2009 (1) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as the ‘Rules’) is not required to be followed - Held that:- provision of Rule 57R(3) of the Rules is required to be followed even when the capital goods were acquired by the assessee under a loan agreement from the bank, decision in favour of the revenue and against the assessee. - Tax Case No. 7 of 2001, - - - Dated:- 15-1-2009 - Chandramauli Kr. Prasad, Dr. Ravi Ranjan, JJ. S/Shri J.P. Khaitan, Sr. Advocate and Rajeev Ranjan Prasad, Advocate, for the Appellant. Mrs. Archana Meenakshi, Senior Standing Counsel and Mrs. Archana Sinha, Junior Standing Counsel, for the Respondent. [Order per : Chandramauli Kr. Prasad, ACJ]. Appellant Lumbini Beverages Private Limited (hereinafter referred to as the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Central Excise, Patna, who allowed the appeal, inter alia, observing that the assessee is the owner of the capital goods and it being so the procedure of Rule 57R(3) of the Rules was not required to be complied with. It also held that IDBI and IIBI are not covered by the expression financing company as used in Rule 57R(3) of the Rules. 3. The Commissioner of Central Excise, aggrieved by the order of the Commissioner (Appeals) in so far as it relates to the Modvat credit of Rs. 68,27,831.24/-, filed appeal before the Customs, Excise Gold (Control) Appellate Tribunal, which accepted its plea that the procedure laid down in Rule 57R(3) of the Rules is required to be followed irrespective of the ownership of the goods. It further ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hypothecation in favour of the lenders in all borrower s movable machinery, machinery spares, tools and accessories, present and future . 7. Mr. J.P. Khaitan, appears on behalf of the assessee, whereas the revnue is represented by Mrs. Archana Meenakshi. 8. Mr. Khaitan, submits that the assessee is the owner of the capital goods and, as such, procedure as required under Rule 57R(3) of the Rules is not required to be followed. According to him, capital goods have not been acquired by the assessee on lease, hire-purchase or loan agreement from a financing company, but under a loan agreement from the bank, money has been used for the purchase of the capital goods and those capital goods have been hypothecated to the bank. According to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has betryed total non-application of mind as regards the jural relationship which comes into existence on the hypothecation of the vehicle for securing the debt. We are, therefore, of the opinion that the Claims Tribunal committed a gross error in law in holding that the hypothecating Bank had stepped into the shoes of the owners for having advanced a loan against the security of the vehicle in question. To drive home his point, Mr. Khaitan states that hypothecation is the pledging of something as security without delivery of title or possession. 9. Mrs. Archana Meenakshi, appearing on behalf of the Commissioner of Central Excise, Patna (hereinafter referred to as the revenue ) submits that the provisions of Rule 57R(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57R(3) of the Rules is required to be followed even when the capital goods were acquired by the assessee under a loan agreement from the bank. 11. In view of the discussion aforesaid, my answer to question no. 1 set out above is in the affirmative, in favour of the revenue and against the assessee and it is held that the Tribunal in the facts and circumstances of the case is correct in law in holding that the procedure under Rule 57R(3) of the Rules is required to be followed. 12. Now referring to the decision of the Gujarat High Court in the case of Rabari Bachubhai Hirabhai (supra), same has no bearing in the facts and circumstances of the case. In this case the question before the Court was as to whether the hypothecating bank, a cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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