Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Interfit Techno P. Ltd. on 23 May, 2003
Equivalent citations: 2003(88)ECC551
JUDGMENT Jeet Ram Kait, Member (T)
1. This appeal filed by Revenue is directed against the Order-in-Appeal No. 226/98-(CBE) dt. 31.12.98 by which the Commissioner (Appeals) has allowed the appeal of the respondents/assessee by setting aside the order passed by the lower authority.
2. The facts of the case are that M/s. Interfit Techno Products Ltd., Coimbatore holders of R.C. No. 7/94 are the manufacturers of stainless steel castings falling under Chapter Heading No. 7325.30 and stainless steel pipe fittings falling under Chapter Heading 7307 of the schedule to the Central Excise Tariff Act, 1985. They have availed Modvat credit on capital goods under Rule 57Q of the Central Excise Rules, 1944. It was alleged that they have contravened the provisions of Rule 57Q read with Rule 57T and Rule 57R of the Central Excise Rules, 1944 inasmuch as they had,--
(i) filed the declaration under Rule 57T after three months of receipt of capital goods.
(ii) taken credit of duty paid on goods which are not covered under the definition of capital goods under Rule 57Q, and
(iii) taken credit of duty paid on capital goods which are exclusively used for manufacture of final products which are exempted from duty.
Hence, a show cause notice was issued by the Range Officer, II C, in his O.C. No. 126/95 dt. 11.1.95. On adjudication, the Assistant Commissioner of Central Excise, Coimbatore II Division, confirmed the total demand of Rs. 3,85,764.63. Being aggrieved by the said order the respondent (assessee) went in appeal before the Ld. Commissioner (Appeals), Trichy and the Commissioner (Appeals) is his Order-in-Appeal No. 226/98 (CBE) dt. 31.12.98 has allowed the appeal by setting aside the order passed by the lower authority.
3. Aggrieved by this order of the Ld. Commissioner (Appeals), the appellant (revenue) have come in appeal on the following grounds:
(i) The delay in filing the declaration beyond the stipulated period of 3 months, the Commissioner (Appeals), has held that it was not a valid ground for denial of credit particularly when the duty paid nature of the goods was not in doubt and further having once condoned the delay, the question of denying the credit of duty on the ground that they did not file the declaration in time was not sustainable. On this score, it was submitted that as per provisions of Rule 57T, the delay in filing the declaration under said Rule can be condoned only for a maximum period of three months from the date of receipt of the capital goods. The condonation was granted on those goods where the declaration was filed within three months and it should not be taken to cover all goods, some of which were received after the lapse of statutory three months period. The power not given by the statute cannot be read in action taken thereunder. Hence, the credit taken on the capital goods in respect of which declaration for receipt of goods was received after the lapse of statutory period of three months is not legal.
(ii) Secondly, on the capital goods viz. Hardness Tester, corrugated panels, panels and transformer, the Commissioner (Appeals) has held that they were used as pollution control equipments and the transformer was used to step down electrical power and therefore, these goods fall within the definition of capital goods. In this regard it is submitted that as per the definition in Rule 57Q as it stood at the relevant period, 'capital goods' meant machines, machinery, plant, equipment, etc., used for producing or processing of goods or for bringing about any change in the course of manufacture of the final product and components, spares and accessories thereof. The goods mentioned above were not used for producing or processing of goods and hence not eligible for the credit.
(iii) Thirdly, the Commissioner (Appeals), has held that the condenser, Gas compressor, wax reclamation unit were only intermediate products and the same were further used for the manufacture of; final products (i.e.) steel castings and hence eligible for the modvat credit. It is submitted that the assessee has used the said goods exclusively for the manufacture of fully exempted products (Wax moulds and ceramic moulds) which were not permissible for availing credit as per Rule 57C as it stood at the relevant period. Hence, credit is not permissible.
4. While reiterating the grounds Ld. DR, Shri C. Mani, has submitted that the appellants filed declaration under Rule 57T after expiry of the statutory period of three months from the date of receipt of the capital goods and, therefore, they are not entitled to take Modvat credit of Rs. 2,83,657.50 attributable to this ground. He further submitted that an amount of Rs. 53,671.23 has been taken as Modvat credit on the capital goods which were not covered under Rule 57Q of the Central Excise Act, 1944 as they were not mentioned as capital goods under the Rules. The items pertaining to this category are hardness tester, dust Collector, transformer and pane. He, therefore, submitted that since the above categories are not mentioned in the rules as capital goods, the Modvat credit of Rs. 53,671.23 as taken by them has to be reversed. He further submitted that the respondent (assessee) has wrongly taken credit of Rs. 85,933.63 on condenser, gas compressor, Wax reclamation unit which are used in the manufacture of Wax moulds and Ceramic moulds which are intermediate products and are exempted from payment of duty they are not entitled for availing the Modvat credit on such moulds. He therefore, submitted that the order of the Ld, Commissioner (Appeals) may be set aside and the order of the Assistant Commissioner may be restored.
5. Appearing on behalf of the respondent/assessee Ld. Counsel Shri Balaji invited my attention to page 34 of the paper book and submits that the Assistant Commissioner condoned the delay in filing the said declaration in terms of Rule 57T of the Central Excise Rules, 1944 to avail the credit on capital goods as such the matter cannot be re-opened. In this connection Ld. Counsel relied on the judgment rendered by the Hon'ble High Court of Madras in the matter of India Pistons Ltd. v. ACC, Madras, 2000 (117) ELT 545 (Mad) wherein the Hon'ble High Court has held that the facilities earlier granted by the Assistant Commissioner cannot be reduced or reversed by the same authority and such withdrawal was without jurisdiction and the department should have been filed petition, if they were aggrieved by order of the Assistant Commissioner.
6. As regards the second allegation, Ld. Counsel submits that the intention of the Modvat credit scheme is to allow credit on all capital goods which are required in the production of the final product and hence credit taken by them on the capital goods was in order and it was within the definition of Rule 57Q of the CEA Rules, 1944.
7. As regard the third allegation, the Ld. Counsel submitted that the credit taken on capital goods which are used in the manufacture of exempted final products, namely wax moulds and ceramic moulds is also legal and proper in view of the fact that the final product namely stainless steel castings has suffered duty. In this connection Ld. Counsel relied on the decisions rendered by the Tribunal in the case of Hindustan Motors v. CCE, 2993 (63) ELT 723 and Leader Engg. v. CCE, 1993 (63) ELT 687, He further submitted that these machines have been installed in the factory and the final products have suffered duty and all these capital goods are covered by Larger Bench decision rendered in the case of Jawahar Mills Ltd. v. CCE, Coimbatore, 1999 (108) ELT 47 (T) confirmed by the Hon'ble Apex Court in the case of CCE, Coimbatore v. Jawahar Mills Ltd., 2001 (77) ECC1 (SC) : 2000 (132) ELT 3 (SC).
8. I have carefully gone through the submissions made by both sides and find that on the capital goods for which the declaration was filed under Rule 57T after a period of 3 months of the receipt of the capital goods, Modvat credit cannot be permitted inasmuch as the Assistant Commissioner neither had the power to condone the delay beyond the period of three months under Rule 57T nor had he condoned the delay, as pleaded by the Counsel inasmuch as the Assistant Commissioner in para 3 of his letter C. No. IV/16/306/94 Part I dt. 29,11.94 has ordered that the delay in filing the said declaration is condoned in terms of Rule 57T of the Central Excise Rules, 1944, in other words whatever delay was condonable within his power, he had condoned the same and instructed the range officer to issue a show cause notice for the ineligible capital goods as listed out in para 2 of the letter and report compliance. Reading para 2 of their letter dt. 27.9.94 would indicate that they have blamed their executive staff who were incharge and looked after the excise matter about the delay as they were under the bona fide belief that the intimation regarding capital goods for availing modvat credit has to be given when the factory commences afresh. Therefore, they had requested the Assistant Commissioner of Central Excise, Coimbatore to condone the delay in filing the declaration. Therefore, it would be evident that the Assistant Commissioner never exercised his authority of condoning the delay beyond the statutory powers vested in Rule 57T of the CE Rules, 1944. Besides he instructed the range officer to issue a show cause notice for the ineligible capital goods as listed out in para 2 of their letter and to report compliance. As regards the review under Section 35E of the CEA Act, 1944 is concerned, there was no ambiguity in the mind of the Department of Revenue about the exercise of the power under Rule 57T by the Assistant Commissioner. Since the Assistant Commissioner has not condoned the delay beyond the statutory period of three months, therefore, the judgment cited by them in the matter of Jawahar Mills Ltd. (supra) is clearly distinguishable and these judgments are not applicable to the facts of the present case. In view of the above position I modify the order-in-appeal passed by the Commissioner (Appeals) by disallowing the Modvat credit of Rs. 2,83,657.50 on capital goods for which declaration was given after expiry of the statutory period of three months. As regard the modvat credit of Rs. 53,671.23 pertaining to condenser, gas compressor, wax reclamation unit which are used in the manufacture of wax moulds/ceramic moulds since the final products i.e. stainless steel castings suffered duty, modvat credit cannot be denied on the ground of exemption of the intermediate products. Therefore, the duty amount of Rs. 85,933.63 allowed by the Ld. Commissioner (Appeals) is legal and proper and his order to that extent is also confirmed. Subject to the above modification the appeal filed by the Revenue is allowed. Ordered accordingly.