Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Raj Cement on 10 June, 2002
Equivalent citations: 2002ECR730(TRI.-DELHI), 2003(159)ELT302(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. Revenue has filed this appeal being aggrieved by the impugned order passed by the ld. Commissioner (Appeals) holding f "I hold that the appellant is entitled to 100% credit in respect of CVD paid by it in the instant case, and therefore, the disallowance of credit of Rs. 24,45,287/- is hereby set aside".
2. The facts of the case briefly stated are that the respondent herein is a manufacturer of cement. In the year 1996, they imported capital goods under Project Import Scheme. Goods imported under Project Import Scheme are classifiable under Chapter Heading 98.01 of the Customs Tariff Chapter Heading 98.01 was not specified under Rule 57Q. The installation of capital goods was completed after 1-3-97 and the respondent took credit thereafter.
3. W.e.f. 1-3-97 chapter heading 98.01 was specified under Rule 57Q. A SCN was issued to the respondent herein asking them to explain as to why Modvat credit should not be restricted to 75% only. The Asstt. Commissioner allowed them Modvat credit only to the extent of 75% of the CVD paid on capital goods by the respondent herein. On appeal however, the Commissioner (Appeals) upheld the contention of the importers and allowed them Modvat credit at a rate of 100% of the CVD paid on the imported capital goods.
4. Arguing the case for Revenue Shri Atul Saxena, ld. DR submits that the ld. Commissioner wrongly allowed excess credit to the respondents herein inasmuch as capital goods were installed only after 1-4-97 and since the date of installation is material for determining the eligibility to credit, the respondents herein were entitled to Modvat credit only of 75% of CVD. Ld. DR also submitted that the ld. Commissioner has placed reliance on CEGAT's Final Order No. A/624/2000-NB, dt. 20-7-2000 - 2001 (137) E.L.T. 391 (Tribunal) that this order has not attained finality; that it was only a remand order and has not been accepted by the Department.
5. Ld. DR also submitted that the ld. Commissioner has wrongly interpreted Board's Circular No. 421/54/98-CX., dt. 10-9-98 inasmuch as this circular only clarified the position of restriction imposed an admissibility of Modvat credit on inputs and not on capital goods with reference to the date receipt of inputs. Ld. DR, therefore, submitted that the ld. Commissioner has wrongly allowed excess Modvat credit to the extent of 25% of CVD. He, therefore, prayed that the appeal may be allowed.
6. Shri B.L. Narshiman, ld. Counsel appearing for the respondent submitted that the case of Revenue is based on Rule 57Q(3) effective from 1-3-97. He submits that though prior to 1-3-97, chapter Heading 98.01 of the CTA (Project Import Heading) was not one of the headings specified under Rule 57Q. However, goods under Project Import were extended capital goods credit if the machines/goods satisfied the condition of capital goods as it then stood. He submits that since capital goods imported satisfied the definition of capital goods in terms of Rule 57Q as it then stood in 1996, the respondent took Modvat credit.
7. Ld. Counsel submits that when the goods were received in the factory of the respondent herein, there was no restriction as to the quantum of CVD to be taken as Modvat credit. The respondent herein rightly took credit of 100% of CVD paid on imported goods. He submits that the goods in their case were imported prior to 1-3-97 and therefore, the condition imposed on or after 1-3-97 could not be made applicable to the goods which were received in the factory of the respondent prior to 1-3-97. In support of his contention he cited and relied upon the decision of this Tribunal in the case of TELCO Ltd. v. CCE reported in 2001 (136) E.L.T. 1316 (T) = 2002 (48) RLT 114 in which this Tribunal held that the date of receipt of the goods in the factory and not the date of their use/installation, is relevant for determining the eligibility of the goods to Modvat credit. Ld. Counsel also referred to the decision of this Tribunal in the case of M/s. Binani Cement Ltd. v. CCE contained in Tribunal's Final Order No. A/267/2002, dt. 20-2-2002 [2002 (143) E.L.T. 577 (T)] in which this Tribunal held that vested right of taking Modvat credit must arise on the date of receipt of the goods. The date of installation of the goods is only a deferred date of taking credit for administrative reasons; that thus the date eligible will be the date of receipt. Ld. Counsel also referred to Board's Circular No. 351/67/97-CX., dt. 5-11-97 in which the Board clarified that the law applicable regarding availability of Modvat credit would be the law applicable when the goods were received in the factory. Ld. Counsel also submitted that in the case of CCE, Coimbatore v. Sengunthar Spinning Mills reported in 1998 (99) E.L.T. 409 this Tribunal held that the availability of Modvat credit has to be determined at the time when the goods are received in the factory and if there was no Modvat credit available at that time, the question of subsequently making available any Modvat credit would not arise.
8. Ld. Counsel also cited and relied upon the judgment of this Tribunal in the case of CCE v. P.M.P. Textiles Spinning Mills Ltd. reported in 1999 (108) E.L.T. 698 in which the Tribunal held that eligibility of Modvat credit under Rule 57Q of Central Excise Rules, 1944 will be determined at the time when the goods are received and if at the time of receipt Modvat credit is not available on the goods, the same will not be eligible for Modvat credit. Ld. Counsel also referred to the judgment of this Tribunal in the case of CCE, Coimbatore v. Best Cotton Mills (P) Ltd. reported in 1999 (105) E.L.T. 647 in which this Tribunal held that eligibility to Modvat credit under Rule 57Q of Central Excise Rules is to be determined at the time when the goods are received.
9. Ld. Counsel also referred to the judgment of the Hon'ble Rajasthan High Court in the case of Shankeshwar Fabrics Pvt. Ltd. v. U.O.I. [2002 (142) E.L.T. 42 (Raj.)] in which the Hon'ble High Court observed that the right to Modvat credit accrues to assessee on the date he pays tax on raw-materials or inputs. Ld. Counsel submits that in view of the above decisions of the Tribunal, the respondent herein becomes entitled to Mod vat credit on capital goods on the date of receipt of the goods and since on the date of receipt of goods, the respondent herein was eligible to 100% of CVD as Modvat credit, therefore, they rightly took the Modvat credit and prayed that the appeal of Revenue may be rejected.
10. We have heard the rival submissions. We have also perused the evidence on record as also the various case law cited by the respondent. On careful consideration of the various submissions made before us and the case law cited, we note that the basic issue that arises for determination in this case is whether the respondent herein was entitled to Modvat credit at 75% or 100% of CVD paid on imported goods. We note that the restriction of 75% of CVD came only on 1-3-97 whereas the goods were received in the factory prior to 1-3-97 though they were installed after 1-3-97.
11. On perusal of the various case law cited before us, we note that for purpose of Modvat credit under Rule 57Q, the date of receipt of the goods in the factory is material date. Right to taking credit accrued from the date of receipt of the goods in the factory, we note further that there was no restriction as to quantum of duty that could be taken as Modvat credit prior to 1-3-97 and the goods were received in the factory prior to 1-3-97. Therefore, we hold that the respondent herein is entitled to Modvat credit at 100% of CVD right from the date of receipt of the goods. This view is further supported by Board's circular.
12. In view of the above discussions, we do not find any reason to interfere with the impugned order. The impugned order to the above extent is, therefore, uphold and the appeal of Revenue is rejected.