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TMI Blog2013 (9) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. from dealers in our country and thereafter exported the same in the exact condition in special containers along with the machinery manufactured by it. Held that:- The appellant had only acted as a trader or as an exporter in relation to the machinery purchased by it, which had been exported and used for setting up a sugar plant in a foreign country - In any case, it cannot be said to have manufactured that plant in its factory - the appellant-assessee did not pay any excise duty on the sugar plant set up by it in Vietnam and therefore there cannot be any question of availing any MODVAT credit – Relying upon Madras Cements Ltd. v. CCE [2010 (5) TMI 8 - SUPREME COURT ] - In order to avail of MODVAT/CENVAT credit, an assessee had to satisfy the assessing authorities that the capital goods in the form of components, spares and accessories had been utilized during the process of manufacture of the finished product. It was pertinent to note that the most important object concerning grant of the MODVAT credit was to see that cascading effect of the duty imposed on the final product cleared at the time of sale was removed - If some duty was levied on the inputs, raw materials etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry can be assembled and the plant can be set up at Vietnam. 4. In the course of its business, the appellant had availed the MODVAT credit on certain goods under the provisions of Rule 57 Q of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ) declaring them as capital goods which had been purchased by the appellant from other manufacturers-dealers in the country and had sent to Vietnam along with other parts of machinery manufactured by the appellant. 5. The respondent-department was of the view that the MODVAT credit availed by the appellant on goods, parts of machinery cables etc. purchased by it from local market and transported in a container along with other parts of machinery manufactured by it was not justified for the reason that the appellant had wrongly described such parts-equipments-cables etc. as capital goods though the said goods were not covered under the definition of capital goods under the provisions of Rule 57 Q of the Rules. The department was of the view that none of such purchased items had been used by the appellant in its factory premises in relation to manufacture of the final product manufactured by the appellant. 6. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for computing and confirming the amount of the MODVAT credit irregularly availed by the appellant and also for imposition of appropriate penalty after affording effective opportunity of hearing to the appellant in accordance with law. 10. Being aggrieved by the afore-stated orders passed by the CEGAT in Final Order Nos. 301 302 of 2003, the present appeals have been filed by the appellant. 11. The learned senior counsel appearing for the appellant had submitted that the impugned orders passed by the CEGAT are bad in law as the CEGAT did not appreciate the facts and law correctly. 12. He had submitted that the MODVAT credit availed by the appellant was just and proper and therefore, there was no question of re-calculating or recovering the amount of the MODVAT credit availed by the appellant. 13. He thereafter submitted that upon correct interpretation of Rule 57Q read with Rule 57A of the Rules, the goods in respect of which the MODVAT credit was availed by the appellant were capital goods . The reason for making such a submission was that the appellant was to set up a sugar plant at Vietnam and for that purpose parts of machinery including electric cable etc. w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product cleared at the time of sale is removed. If some duty is levied on the inputs, raw materials etc. and if the final product is also dutiable, then the duty levied on inputs i.e. raw materials is to be reduced from the duty ascertained on the final product. Thus, there are two conditions for getting the MODVAT credit benefit: (i) On the raw materials i.e. on the inputs, the manufacturer must have paid duty and such raw material must have been used in the process of manufacturing the final product in his factory or premises. (ii) Excise duty must have been levied on the final product. If there is no duty levied on the final product, there would not be any question of grant of any relief because in that case there would not be any cascading effect on the duty imposed. 22. Looking at the above stated clear legal position, one may see here that no duty was paid by the appellant on the final product i.e. on the sugar plant which had been set up in Vietnam. For time being, let us forget the fact whether the plant is movable or immovable the fact remains that no duty was paid on the said plant and therefore, there would not be any question with regard to getting credit on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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