Customs, Excise and Gold Tribunal - Delhi
Gail (India) Ltd. vs Cce on 23 September, 2004
Equivalent citations: 2004(97)ECC1
ORDER V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s, GAIL (India) Ltd., the issue involved relates to eligibility to avail MODVAT Credit in respect of capital goods under Rule 57Q of the Central Excise Rules, 1944.
2. Shri B.L. Narasimhan, learned Advocate, submitted that the appellants manufactured HDFE/LLDPE, Ethylene, Propylene, Butene 1, etc; that they commenced the erection and commissioning of U.P. Petrochemical Project in 1944; that this project was commissioned and commercial production of various products was started in March, 1999; that in 1994, both foreign and indigenous suppliers started despatch of various items required for setting up of the Petrochemical Project; that the supply was spread over a period of 5 years; that after obtaining the Central Excise registration in December, 1994, they had started availing the MODVAT Credit of the duty paid on the capital goods; that the Department has disallowed the MODVAT Credit on various grounds which are as under :
3. He mentioned that MODVAT Credit amounting to Rs. 44,119,504 had been disallowed to them on the ground that Modvat declaration had not been filed by them before taking the MODVAT Credit; that, however, it has been held by the Department that on merits they are eligible for the MODVAT Credit in respect of the impugned items; that the finding is factually incorrect as due declaration for all the items had been filed and for delay in filing the declaration, the necessary request for condoning the delay had also been filed; that Rule 57T of the Central Excise Rules, 1944 was amended by Notification No. 7/99-CE (NT) by which Sub-rule (13) was inserted in Rule 57T; that Sub-rule (13) provided that the credit shall not be denied on the ground that the declaration does not contain all the details required to be contained therein or the manufacturer fails to comply with any other requirement under Sub-rule (1); that the Board also clarified vide Circular No. 441/7/99-CX dated 23.2.1999 that as long as the capital goods have been in the manufacture of dutiable goods and have actually suffered excise duty, the credit cannot be disallowed. He, therefore, submitted that in respect of these items credit is not disallowable to them.
4. We also heard Shri S.M. Tata, learned S.D.R. for Revenue. After considering the submissions of both the sides, we observe that the appellants have claimed to have filed the MODVAT declaration in respect of capital goods covered by this category in different Nomenclature. For example, the MODVAT Credit has been disallowed to them in respect of tiles for burners, whereas according to the learned Advocate, the same has been declared as refractory in their declaration filed on 17.2.95; that similarly, the MODVAT Credit has been disallowed to the appellants in respect of coil assembly, which, according to them, has been declared as "Heaters and Heat Exchangers" in their MODVAT declaration dated 17.2.95. As this aspect has not been considered by the lower Authorities, we are of the view that the matter regarding availability of MODVAT Credit in respect of these items should go back to the jurisdictional Adjudicating Authority to examine whether all the capital goods in respect of which MODVAT Credit has been disallowed, are covered by another Nomenclature in the declaration filed by them. The jurisdictional Adjudicating Authority will decide this aspect after affording a reasonable opportunity of hearing to the appellants.
5. The learned Advocate also mentioned that MODVAT Credit of Rs. 37,54,883 has been disallowed to them on the ground that duty-paying documents were not available. At the outset, he stated that the appellants are only challenging the disallowance of MODVAT Credit amounting to Rs. 25,81,752 out of the total amount of MODVAT Credit disallowed on this count and the remaining amount is not being contested by the appellants; that the credit amounting to Rs. 25,81,752 has been disallowed in respect of silos and blenders for want of original Bill of Entry No. 1609 dated 17.6.96; that the said original Bill of Entry was produced to the department at the time when the credit thereon was taken in 1999 and the Department, after perusing the original Bill of Entry, had made the endorsement on the Bill of Entry; that the original Bill of Entry, thereafter, has been sent by them to M/s. S.I.L. for the finalisation of project import assessment by Customs; that in these circumstances, the original Bill of Entry was not available with them; that in any case they are in possession of the attested copy of the Bill of Entry No. 1609 dated 17.6.96 and hence the credit cannot be denied to them.
6. As the appellants have conceded the disallowance of credit to the extent of Rs. 11,73,131 the disallowance of the same is upheld. The issuance regarding eligibility of MODVAT Credit in respect of goods in question is remanded to the jurisdictional Authority for a fresh adjudication after ascertaining the fact whether the original Bill of Entry immediately after taking the credit, was produced to the Range Superintendent and only subsequently it is not available with them as the same had been sent to the Customs House for completing the Project Import assessments. The Adjudicating Authority will also consider whether the benefit of MODVAT Credit can be extended to the appellants on the basis of attested copy of the Bill of Entry which is available with them. The jurisdictional Authority will decide the eligibility of the MODVAT Credit after affording an opportunity of hearing to the appellants.
7. The Id. Advocate, further, mentioned that MODVAT Credit amounting to Rs. 5,12,102 has been disallowed to them in respect of various items such as, instructor & DCS interface with user guide, light fitting, transformer oil, refrigerant gas, etc.; that the appellants are not disputing the disallowance in respect of these goods. As the appellants are not disputing the disallowance of MODVAT Credit, we uphold the disallowance of MODVAT Credit amounting to Rs. 5,12,102 on these items. Finally, the learned Advocate, submitted that the MODVAT Credit amounting to Rs. 3,91,72,898 has been disallowed on the ground that the declaration has been filed by them late. In this regard, he relied upon the Board's circular dated 23.2.1999 read with Sub-rule (13) of Rule 57T amended by Notification No. 7/99-CE dated 9.2.99. He also relied upon the decision of the Larger Bench of the Tribunal in the case of Kamakhya Steels Pvt. Ltd. v. CCE, 2004 (92) ECC 230 (LB) : 2000 (121) ELT 247 wherein the Tribunal has held that the amendment made in Rule 57T by Notification No. 7/99 will be applicable to pending cases. We also heard the learned S.D.R.
8. The CBEC vide Circular No. 441/7/99-CX dated 23.2.99, has clarified the amendment made in Rule 57T by Notification No. 7/99-CE (NT). It has been clarified by the Board that the said Notification has been issued so as to empower the Assistant Commissioner to allow the credit of duty paid on capital goods ignoring minor procedural lapses in filing the declaration or in the invoice/documents based on which the credit is to be taken. The circular, further, emphasised, that the Assistant Commissioner, however, should ensure that capital goods have suffered duty and are being used in the process of manufacture. In the present matter, the only ground for denying the MODVAT Credit is that the declaration has been filed late. There is no charge that the capital goods, in question, have not been used in the manufacture of excisable goods. Thus, there is a procedural mistake in not filing the declaration before receipt of the capital goods. In view of these facts, the MODVAT Credit in respect of these capital goods cannot be denied to the appellants merely because the declaration was filed late in view of the Board's circular dated 23.2.99. We, therefore, set aside the impugned order as far as it relates to disallowance of MODVAT Credit amounting to Rs. 3,91,71,898 and hold that the appellants are eligible to take the credit of the said amount.
The appeal is disposed of in the above manner.