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TMI Blog2015 (6) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... es before and after amendment the requirement of ownership was in the erst while regime upto 1994 as governed by then subsisting rules. After 1994, sub rule 3 of Rule 57R having under gone amendment to it, removed such requirement of ownership/acquisition from financing agency. For taking credit of duty paid on said goods, it would not be necessary that capital goods shall either be owned by the assessee or those shall be acquired by finance from financing agency. Denial of credit based on such ground is unsustainable. - Decided against Revenue. - CENTRAL EXCISE APPEAL NO.27 OF 2004 - - - Dated:- 16-2-2015 - S.C. DHARMADHIKARI AND SUNIL P. DESHMUKH, JJ. For The Appellant : Mr. A. S. Rao a/w Mr. Jitendra B. Mishra For The Respondent : Mr. M. H. Patil i/b. M/s. Cenex Services JUDGMENT (PER SUNIL P. DESHMUKH,J) We have perused the following substantial questions of law as framed by this Court in its order dated 18th August, 2005: (1) Whether the Respondent/Assessee is entitled to claim Modvat/CENVAT when Capital goods is not owned/purchased nor taken on lease or hire purchase agreement? (2) Whether the view taken by the Tribunal is correct in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975) equivalent to the duty of excise paid on such capital goods. Explanation For the purpose of this section, ( 1) capital goods means ( a) machines, machinery, plant, equipment, apparatus, tools or appliances used to producing or processing or any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weighbridges used in the factory of the manufacturer. (2) specified duty means duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975). (2) Notwithstanding anything contained in subrule (1), no credit of the specified duty paid on capital goods shall be allowed if such duty has been paid on such capital goods before the 1st day of March, 1994. RULE 57R. Credit of duty not to be allowed or denied or varied in certain circumstances and adjustment in duty credit. (1) Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resents the amount of specified duty paid on such capital goods. 6] The provisions of Rule 57R after the amendment read as under: RULE 57R. Credit of duty not to be allowed or denied or varied in certain circumstances and adjustment in duty credit. (1) No credit of the specified duty shall be allowed on (capital goods which are used exclusively in the manufacture of final products) (other than final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year) (which are exempt from the whole of the duty of excise leviable thereon are chargeable to nil rate of duty) except when the final product is either, (i) cleared to a unit in a Free Trade Zone, or (ii) cleared to a hundred per cent exportoriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks; (2) Credit of the specified duty allowed in respect of any capital goods shall not be denied or varied on the ground that any intermediate products have come into existence during the course of manufacture of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if such adjustment is not possible for any reason, the user manufacturer shall pay the amount in cash equal to the amount of refund allowed to be manufacturer or as the case may be, to importer of capital goods. (5) If a user manufacturer has taken credit on any capital goods and subsequently it so happens that any additional amount of duty is recovered from the manufacturer of such capital goods or importer of such capital goods, as the case may be, then the user manufacturer shall be allowed an additional credit equal to the amount of such additional amount recovered. (6) The provisions of subrule (5) shall not apply in cases where the duty on capital goods has been short leveled or short paid or has been erroneously refunded by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provisions of the Act or the rules made thereunder with the intent to evade payment of duty. (7) (i) The additional credit as per subrule (5) shall be allowed by the proper officer on the basis of a certificate issued by the Superintendent of Central Excise having jurisdiction over the factory, or as the case may be, by the proper office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Union of India V/s. Marmagoa Steel Ltd. reported in 2008 (229) E.L.T. 481 (S.C.). He submits that once it is shown that the duty is paid by the supplier, then, credit is not to be denied to the assessee who manufactures the goods from the moulds supplied by the supplier/Original Equipment Manufacturer. In the case referred to above, the goods were transferred directly by importer to unit of Assessee from the Port and never went to manufacturing unit of importer. However, relevant duty paid documents were produced indicating that importer had borne the duty at the time of import and in such a case credit could not be disallowed to the assessee/manufacturer. He submits that facts in said case are identical to the facts in present matter. He refers to various other decisions particularly the order of this Court in Misc. Civil Application No.606/2002 dated 15th July, 2009 as well as dated 31st August, 2010 in Central Excise Appeal No.2 of 2006 in the case of The Commissioner of Central Excise V/s. M/s. Nylocraft Precision Plastics Pvt. Ltd. and Others. He further relies on the judgments rendered by two other High Courts, namely, Gujarat and Punjab Haryana reported in 2010 (26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on moulding machines and manufactures finished goods as per the requirement of the original equipment manufacturers. It is not in dispute that the moulds supplied by the supplier are capital goods. The moulds used for injection moulding machine to manufacture the goods/finished products were supplied to the respondent assessee by original equipment manufacturer. These were duty paid moulds by the original manufacturer. Credit of the duties on moulds was being taken by the assessee. It is also not in dispute that the moulds supplied by the supplier are capital goods. 12] Though reliance is being placed by the appellant in the case of Terene Fibres India Pvt. Ltd. vs. Commissioner of Central Excise, Mumbai VI. In said case ultimate decision after difference of opinion between the members in the Division Bench of the Tribunal has been rendered in favour of the assessee holding that the demand is unsustainable. From the Judgment as has been rendered it is difficult to consider that there is a clear decision by the Tribunal that modvat credit would not be available to the respondentassessee if the property in capital goods continued to vest in the supplier. 13] However, various ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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