Customs, Excise and Gold Tribunal - Tamil Nadu
Cce, Coimbatore vs M/S. Vijayalakshmi Mills Ltd. on 26 July, 2001
Equivalent citations: 2001(77)ECC724
ORDER
Shri S.L.Peeran
1. This is a revenue appeal arising from order-in-appeal No. 642/96 dated 1.10.1996 by which he has held that the assessee is entitled to Modvat credit in respect of capital goods used in the manufacture of cotton combed/carded. However, there is an intermediary product which is arising while manufacturing the final product. In view of this, the order in original had rejected the modvat credit on the ground that the said intermediary product is not a specified product. The assessee has pleaded that it is not a marketable product and it cannot be considered as goods. The Commissioner (Appeals), upheld the appellant's contention. He took into consideration his earlier orders also.
2. The Ld. SDR submits that in the assesse's own case, the Tribunal in final order 91/99 dated 12.1.1999 has remanded the case denovo consideration to reconsider the pleas raised by the revenue.
3. The Ld. Consultant submits that the manufacturer in the process of manufacturing cotton carded/combed an intermediate product. They have used the capital goods both for exempted and duty paid goods. Hence were entitled for claiming the modvat credit as capital goods. However, he has no objection for the matter being remanded as in their own case by final order No. 91/99 dated 12.1.1999, the Bench had remanded the case which is still pending adjudication. He further submits that the benefit was also rejected on the grounds that gate pass was issued prior to 31.3.94 and they had taken the credit after 30.6.1994. His submission is that the Assistant Commissioner condoned the delay on 15.11.1994 in respect of filing the declaration under Rule 57(T) and hence taking of credit was proper. He relies on the judgement rendered in the case of Lloyds Steel Industries Ltd. Vs. CC, Nagpur, 1998 (101) ELT 29 which has upheld their plea. He further relies on the judgment of the Tribunal in the case HCL Ltd. Vs. CCE, Meerut, 1994 (71) ELT 608 and CCE, Allahabad Vs. Anand Transformers (P) Ltd. 1998(103) ELT 678.
4. On a careful consideration of the submission, we notice that the Commissioner was aggrieved with order-in-appeal No. 105/97 (CBE) in respect of Appeal No. E/1743/97 in assessee's own case. The Tribunal after due consideration, vide final order dated 12.1.1999 has remanded the case for denovo consideration by recording the finding as follows:
"I have carefully considered the submissions on both sides and records of the case. Regarding the credit on original documents as well as on rubber stamped invoices etc., I find that the order impugned has rightly remanded the matter to the original authority for allowing credit after verification (in both types of cases) in the ground that substantive benefit of credit is not to be denied on such procedural irregularities. It is noted that the Board's circular supra also provides for such a course of action.
With respect to credit on the machines, I find that there is great merit in the submission of the Ld.Consultant that the ratio of SINGARAVELAR SPINING MILLS & OTHERS (supra) may not apply here in view of the word "exclusive" in first proviso to Rule 57(T). A plain reading of the proviso shows that assessee has to declare and certify that the capital goods were not "exclusively" used in manufacture of any final product which was exempted. Applying the ratio of SINGARAVELAR SPINNING MILLS & ORS. (supra). I find that though combed/carded cotton was 'goods', the further conclusion noted therein does not automatically follow here, if the machines in this case wee not exclusively used only to produce that commodity. Because, the Rule 57T does not expressly provide that where the capital goods are used for dual purpose viz. to manufacture both dutiable and exempted final products, such dual usage would render it ineligible for modvat credit. Therefore, the word 'exclusively' assumes great significance and I find that in such dual usages, as long as the machines were atleast also used for producing dutiable synthetic yarn, then such an 'exclusive' usage would stand precluded and credit would be available. However, as this is a question of fact, the same needs to be verified by the jurisdictional Assistant Commissioner. Since the order-in-appeal had already correctly remanded the matters of invoice verification to him (as noted above), therefore, this issue also needs to be remanded to the Assistant Commissioner for verification.
In view of the aforesaid findings, the order-in-appeal is modified only to the extent that credit allowed therein on pro-rate basis is set aside and the matter remanded to the original authority for verification as per above. If on verification it is found that there subject capital goods were also used for manufacture of synthetic yarn, then since declaration thereof was filed before taking credit and duty thereon having been paid after 1.3.94, credit thereon shall be allowed by him to the full extent. Revenue appeal is disposed of accordingly."
5. We notice that the issue being common, the matter has to be remanded for denovo consideration to reconsider the pleas raised by the revenue, as well as by the assessee in the light of supra. Therefore, the impugned order is set aside and matter remanded to the original authority with a direction that the assessee shall be heard on the issues and the original authority shall pass a detailed considered order in the light of their submission and the judgement already cited. Thus the appeal is allowed by remand to the original authority, the Assistant Commissioner (CE) Coimbatore (III) Division for denovo consideration.
(Pronounced and dictated in open court)