Customs, Excise and Gold Tribunal - Delhi
M/S. U.P. State Sugar Corpn. vs Cce, Allahabad on 30 January, 2001
Equivalent citations: 2001(130)ELT559(TRI-DEL)
ORDER
P.C. Chacko
1. The appellants are manufacturers of sugar and are availing the facility of modvat credit on capital good sunder Rule 570 of the Central Excise Rules. In October, 1996 they took modvat credit on certain capital goods namely, "A.C. Supply Geared Motor" and "Brass Tubes." Both the lower authorities disallowed the modvat credit taken on A.C. Supply Geared Motor on the ground that no declaration had been filed in respect of the said capital goods. In respect of Brass Tubes, both the authorities disallowed the modvat credit on the ground that the credit was taken prior to installation of the capital goods in the assessees' factory. In the present appeal, the appellants have challenged the orders of the Assistant Commissioner and the Commissioner (Appeals).
2. I have heard both sides after examining the record. Ld. Advocate Sh. Bipin Garg for the appellants submits that the appellants had, in fact, filed a declaration on 11.12.95, wherein they had declared the capital goods (A.C. Supply Geared Motor) as "other engines and Motors". He has drawn my attention to a copy of the declaration available on record. He argues that the A.C. supply Geared Motor was covered by the expression "other Engines and Motors" in the declaration dated 11.12.95 and, therefore, it was improper on the part of the departmental authorities to deny modvat credit on the said goods on the ground that no declaration had been filed in respect of the goods. Ld. Counsel has raised an alternative plea, apart from the above ground of the appeal. He submits that, according to the Board's Circular No. 44/7/99-CX dated 23.2.99, the benefits of Notification No. 7/99-Ce(NT) dated 9.2.99, whereby Rule 57T was amended by way of insertion of sub-rule 13, are available to the appellants. As per Sub-rule 13, modvat credit on capital goods shall not be denied on the ground that a declaration filed under Sub-rule 1 of Rule 57T does not contain all the details required to be contained therein. The benefits of this provision should be extended to the appellant's case also as per the Board's circular. Ld. Advocate has, in this connection relied on the Tribunal's Larger Bench decision in the case of Kamakhya Steel Pvt. Ltd. Vs.C.C.E., Meerut [2000 (40) RLT 575]. In Kamakhya Steels the Larger Bench remanded the question of admissibility of modvat credit taken on certain inputs or the basis of Rule 57G declaration, to the jurisdictional Assistant Commissioner, directing him to examine the question in the light of the Board's circular ibid which clarified that the provisions of Notification 7/99-CE(NT) were applicable to all pending modvat cases. The Larger Bench held that the Board's circular would also be applicable to proceedings arising before the departmental authorities pursuant to remand orders of the Tribunal. Ld. Advocate has, therefore, prayed for remanding the admissibility of modvat credit on "A.C.Supply Geared Motor" to the Assistant Commissioner for fresh decision after due consideration of the appellant's declaration dated 11.12.95 in the light of the Board's circular and the decision of the Larger Bench in Kamakhya Steels.
3. The respect of modvat credit on Brass Tubes, Id. Counsel admits that the credit was taken prior to installation of the goods in the appellant's factory. He, however, submits that the credit would still be available to the appellants by virtue of the exclusion clause contained in Rule 570 (2) (ii). Ld. Counsel submits that the "Brass Tubes" in question were components, spares or accessories of pans, evaporators and juice-heaters, which were capital goods covered by sub-clause (aa) of clause (1) of Explanation to Sub-rule 1 of Rule 570 and, therefore, the Brass Tubes were squarely covered by sub-clause (d) of clause (1) of the Explanation. Referring t the department's plea that the Brass Tubes were covered by sub-clause (g), Id. counsel submits that, even if it is assumed that the Brass Tubes were covered by sub-clause (g), they would not ipso facto stand excluded from sub-clause (d) have been mentioned in the aforesaid exclusion clause contained in clause (ii) of sub-rule (2) of Rule 570 and, therefore, modvat credit would be admissible on the goods irrespective of the fact that the goods were installed after taking of modvat credit thereon. Ld. Advocate further submits that, since there is no dispute regarding payment of duty on the capital goods or their receipt and installation in the factory of the appellants or their utilisation in the manufacturing process in the factory, the modvat credit cannot be denied on the ground of any minor procedural lapse on the part of the assessees. Ld. Advocates, therefore, prays for allowing the modvat credit taken on Brass Tubes.
4. Ld. JDR, Sh. S.C. Pushkarna submits that the question of admissibility of modvat credit on A.C. Supply Geared Motor could be remanded to the adjudicating authority by following the Larger Bench decision in Kamakhya Steels (supra).As regards the admissibility of modvat credit on Brass Tubes, Id. DR submits that these Brass Tubes are squarely covered by the expression "Tubes and Pipes and fittings thereof used in the factory" contained sub-clause (g) of clause of (1) of Explanation to sub-rule (1) of Rule 570 and, therefore, the goods cannot attract the general provisions contained in sub-clause (d). He submits that a special provision should prevail over a general one. It is further submitted by Id. DR that there is nothing on record to show that the Brass Tubes in question were components, spares or accessories of pans, evaporators or juice-heaters as claimed by the appellants. He, therefore, pleads for upholding the decision of the departmental authorities or the question of admissibility of modvat credit on Brass Tubes.
5. I have carefully examined the above submissions. As regards the modvat credit on A.C.Supply Geared Motor, I find that the appellants had in fact filed a declaration on 11.12.95, declaring inter alia, other Engines and Motors, and classifying such goods under Chapter 84 of the Central Excise Tariff. There is no denial of the fact that A.C.Supply Geared Motor was also a Motor or of the fact that the declaration was duly received under signature by the Inspector of Central Excise. This being the factual position, it appears that denial of modvat credit on the said goods or the ground of "no declaration" was wrong. The only question arising for consideration now is whether the declaration filed on 11.12.95 was sufficient for the purpose of availment of the modvat credit. In this connection, Id. counsel's reliance on the Board's circular is quite apposite. That circular said that the amended provisions of Rule 57T [as amended under Notification No.7/99-CE(NT)] were also to be followed by departmental authorities in pending modvat cases. The decision of the Larger Bench in Kamakhya Steels (supra) is to the effect that remanded proceedings before the departmental authorities are continuation of the original proceedings and, therefore, would attract the Board's instructions contained in their circular. If the instant issue is remanded to the Assistant Commissioner, it would be a pending case before the Assistant Commissioner so as to attract the Board's circular and the Larger Bench decision. I am, therefore, inclined to remand the question of admissibility of modvat credit on A.C. Supply Geared Motor to the jurisdictional Assistant Commissioner for a fresh decision, by having due regard to the provisions of Sub-rule 13 of Rule 57T [inserted by Notification No. 7/99-CE (NT)] and also having regard to the aforesaid Board's circular.
6. As regards the Brase Tubes, there is no dispute of the fact that the goods were installed after 26.1096 and the credit on the goods were taken before the date of installation. The only question to be considered is whether the Brass Tubes would attract sub-clause (d) of clause (1) of the Explanation to Rule 570 (1) notwithstanding the coverage of the good by sub-clause (g) of the said clause. The appellants have not contested the coverage of the goods under sub-clause (g) but they have argued that such coverage of the goods under sub-clause (g) would not, ipso, facto, affect their coverage under sub-clause (d). The Revenue's argument is that the goods are exclusively covered by sub-clause (g) and, therefore, credit cannot be allowed on them by virtue of the provisions of Rule 570 (2)(ii). It has been consistently argued by the appellants that the Brass Tubes in question were components, parts or accessories of capital goods (pan, evaporator, juice-heaters) falling under Chapter 84 of the Central Excise Tariff and were, therefore, covered by sub-clause (d) of clause (1) of the Explanation. Ld. JDR on the other hand, has argued that there is no evidence on record in this behalf. I, therefore, find that this question also requires to be remanded to the Assistant Commissioner in the interest of justice. The Assistant Commissioner shall ascertain as to whether the Brass Tubes in question were, in fact, used as components, parts or accessories of pans, evaporators, juice-heaters or any other capital goods covered by sub-clauses (a) to (c) of clause (1) of the Explanation to Rule 57Q (1). If the adjudicating authority finds that the goods viz. Brass Tubes were so used in the appellant's factory, that authority shall allow the assessees to have the benefit of modvat credit, irrespective of any coverage of the Brass Tubes under sub-clause (g).
7. The Assistant Commissioner shall pass speaking order on the remanded issues after affording a reasonable opportunity of hearing to the assessees. The orders of the lower authorities are set aside and the appeal is allowed by way of remand in the above terms.