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TMI Blog2012 (9) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT dated 26-7-2004 [2004 (177) E.L.T. 405 (Tri.-Del.)]. At the time of this appeal, following question of law has been framed : "Whether, on the facts and in the circumstances of the case, the Custom Excise & Service Appellate Tribunal was, justified in law in restricting the allowance of credit of duty paid in relation to capital goods on the basis of the date of receipt of the goods in factory premises when Rule 57Q of the Central Excise Rules does not specifically stipulate any such requirement?" 3. The assessee is a manufacturer of paper, paperboards, etc. The assessee for the said purpose, desired to set up its factory at Ambheti in Vapi Taluka. Construction of the factory sheds and other related activities were going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Before shifting/transferring of the said Imported Capital goods, we will observe all the formalities related to Capital goods as required under Central Excise Rules, 1944. We will also furnish all required declaration/s under Form T(1) & T(2), before the Asstt. Commissioner of Central Excise, Div. Valsad & Supdt. Of Central Excise, Valsad respectively as per the Board File No. 267/40/96-CX. 8, dated 29-2-1996 (Circular No. 179/13/96-CX. 8) under intimation to Your Honour (Intimation regarding shifting of the Plant & Machinery). The above is submitted to Your Honour for your kind information & records. If Your Honour needs any further information in relation to this capital goods, imported from Canada and stored at our above referred p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory provisions and came to the conclusion that modvat credit on capital goods is available and is related to production in factory and, therefore, relationship to production comes into existence only on receipt of the items in question in the factory and not upon their mere purchase or import or even receipt in the office of the manufacturing company. On this basis, the Tribunal was pleased to hold that the Department's stand is valid that the assessee cannot claim the benefit of old scheme permitting 100% credit on the capital goods imported and would be governed by the changed provisions by virtue of introduction of sub-rule (3) to Rule 57Q. 7. Counsel for the petitioner submitted that the facts are very peculiar. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or the additional duty leviable under Section 3 of the Customs Tariff Act paid on capital goods. Sub-rule (3) of Rule 57Q provides that notwithstanding anything contained in sub-rule (1), the manufacturer of the final products shall be allowed credit of additional duty leviable under Section 3 of the Customs Tariff Act to the extent of 75% of additional duty paid on such goods, sub-rule (5) of Rule 57Q further provides that the credit of the specified duty on capital goods shall not be allowed if such capital goods were received in the factory before the 1st day of March 1997. Relevant portion of Rule 57Q read as under : "(2)(i) The manufacturer of the final products shall be allowed credit of the duty of excise or the additional du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available under the schemes, governing the field. 10. As per sub-rule (5) of Rule 57Q, the goods which were received in the factory before 1st March 1997 would continue to be governed by the schemes made by the Government and not by Chapter AAAA and sub-rule (1) thereof. 11. To our mind, sub-rules (3) and (5) have to be read together. Reading both these rules provide that till 1-3-97, the credit entitlement of a manufacturer for additional duty under Section 3 of the Customs Tariff Act would be governed by the old scheme and the provisions made thereunder, but after 1-3-97, such entitlement would be reduced to 75% irrespective of what the position may have been in other schemes. on the other hand, in terms of sub-rule (5) of Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced on 1-3-97. Further if for some practical reasons, looking to the peculiar facts such goods could not be physically shifted to the factory and had to be stored for a short while in the Administrative office of the assessee at a short distance from factory, to our mind, same would sufficiently cover the situation emerging from sub-rule (3) and sub-rule (5) of Rule 57Q which we have given our interpretation to as noted above, in our opinion, the Department was not justified in denying 100% credit on the additional duty paid by the appellant on such capital goods merely on the ground that physically such goods were not shifted to the factory before 1-3-97. 13. In the result, question is answered in favour of the assessee. The&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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