Customs, Excise and Gold Tribunal - Tamil Nadu
Grasim Industries Ltd. vs Cce on 12 March, 2004
Equivalent citations: 2004(95)ECC370
ORDER Jeet Ram Kait, Member (T)
1. This appeal filed by M/s Grasim Industries Ltd (herein after referred to as the appellants) is directed against the order in Appeal No. 57/03 SCN (TRY-II) dated 25.02.2003 passed by the Commissioner of Central Excise (Appeals), Trichy whereby the Commissioner has rejected the appeal of the appellants and upheld the order passed by the original authority wherein the original authority has disallowed the credit of Rs. 2,39,96,904/- being the excess credit availed by the appellants on capital goods, besides imposition of penalty of Rs.2000/- under Rule 173Q of the CE Rules, 1944. He had also ordered for recovery of interest in terms of Section 11AA of the CE Act, 1944.
2. The brief facts of he case are that the appellants are engaged in the manufacture of cement and clinker falling under chapter 25 of the schedule to the CETA 1985. They are availing Modvat Credit of duty paid on the inputs as well as capital goods under Rule 57A and 57Q of the CE Rules. The appellants after filing necessary declaration for Modvat credit of duty paid on capital goods, imported certain capital goods under Project Import Regulations falling under heading No. 98.01 of the Customs Tariff Act, 1975. Though these items were received in the factory before 29.2.2000, they were installed in the factory only on 6.3.2000. The appellants availed Modvat Credit on 31.3.2000 and 1.4.2000, that is after the installation of the capital goods. Rule 57Q as it existed between 1.3.97 and 29.2.2000 permitted Modvat credit to the extent of 75% of the countervailing duty on the capital goods imported under Project Import Regulation. This restriction was however removed vide Notification No. 11/2000 CE (NT) dated 1.3.2000. Since installation of the capital goods was completed only on 6.3.2000 the appellants availed 100% credit of countervailing duty pursuant to the amendment. The original authority disallowed the credit in excess of 75% to the extent of Rs 2,39,96,904/- on the ground that the goods were received into the factory prior to 29.2.2000 as at that time the credit available was only to the extent of 75%. He has also ordered recovery of interest apart from imposing penalty as noted above. The appellants filed appeal before the Commissioner (Appeals) who rejected the appeal and hence the present appeal.
3. Shri N. Venkataraman, learned Counsel for the appellants referred to the written submissions made by appellants wherein it is inter alia stated as under:
(1) The capital goods were received in the factory before 29.02.2000 but were installed only after 1.3.2000. Modvat Credit was availed only on 31.3.2000 and 1.4.2000. Rule 57Q as it existed between 1.3.97 and 29.2.2000 permitted Modvat Credit on CVD under project import only to the extent of 75% of the CVD paid under Section 3 of the Customs Act, 1962 and the limitation was removed vide Notification 11/2000 (NT) dated 1.3.2000.
(2) Since installation was completed only on 6.3.2000 pursuant to the amendment by Notification No. 11/2000 (NT), appellants availed 100% CVD.
3. The modvat credit on capital goods scheme came into force with effect from 1.3.1994. At the time of inception of the scheme there was no embargo as to the point at which credit ought to be availed. Therefore, like to input modvat scheme, the credit was available the moment goods were received inside the factory.
(3) With effect from 1.1.1996 availment of capital goods credit is not automatic on the basis of receipt of goods. No credit shall be taken unless otherwise the capital goods are either installed or used for manufacture of excisable goods. In other words, eligibility was contingent upon installation of the capital goods in the factory of the manufacturer. Sub rule 2 of Rule 57Q during the relevant time became Rule 57Q of the CE Rules ibid.
(4) From 1.3.1997 to 29.2.2000, Rule 57Q(3) restricted the eligibility of capital goods credit falling under 98.01 to the extent of 75% of the CVD paid on such goods and the embargo was removed vide Notification No. 11/2000 (NT) dated 1.3.2000 (5) The question therefore, arises whether the credit should be restricted to 75% on the date of receipt 3.1 The learned Counsel also referred to the following judgments and submitted that the lower authority has failed to apply the ratio of the following judgments :
(a) Pudumjee Pulp & Paper Mills Ltd. vs. CCE, reported in 1996 (87) ELT 557 (WRB-Mumbai)
(b) Hind Spinners Industries Growth Centre vs. CCE, reported in 1997 (96) ELT 656 (NRB-New Delhi)
(c) HEG Ltd. vs. CCE reported in 1998 (100) ELT 133 (NRB-New Delhi)
(d) CCE, Nagpur vs. DCL Polyester Ltd. reported in 2001 (132) ELT 333 (WRB-Mumbai)
(e) Hindustan Cables Ltd vs. CCE, Bolpur reported in 2001 (137) ELT 735 (ERB-Kolkata)
4. Smt Bhagyadevi, learned SDR on the other hand invited our attention to sub para (2) & (7) of Rule 57Q. She has submitted that at the relevant time, when the goods were received into the factory, the credit available was 75% and the credit was enhanced to 100% only by the amendment by Notification No. 11/2000 CE (NT) dated 1.3.2000 and inasmuch as in the present case, the goods were received into the factory at the time when the credit allowable was only 75%, the authorities below have rightly held that the appellants are not eligible for 100% credit. She has also invited our attention to the comments received from the Commissionerate, a copy of which has been filed in court wherein it is inter alia stated as under:
(1) The appellants' claim that the quantum of credit is based on the time of availment is not correct. At the relevant time (when the goods were received in the factory) the credit admissible was only 75% and not 100%.
(2) In the case of M/s Benani Cement Ltd. vs. CCE reported in 2002 (143) ELT 577 which holds that "vested right of taking credit must arise on the date of receipt of goods and the date of installation of the goods is only a deferred date of taking credit for administration reasons and thus the date eligible will be date of receipt.
(3) The eligibility includes quantum of eligible credit also. When the quantum of credit eligible is known to the appellant at the time of receipt of goods in the factory, the issue attained finality there itself. If there is any change that arises subsequently by a Notification, which gives prospective effect, the appellant cannot claim any more credit on that issue.
(4) The appellants contention that restriction to the extent of 75% was not in existence at the time of installation and hence the credit should be allowed to the extent of 100% is not acceptable. The criteria to decide the eligibility is the date of receipt of capital goods and the assessee was eligible for 75% credit at the time of receipt of capital goods in the factory.
(5) The restriction that eligible credit can be taken after installation of goods, does not mean that the quantum of credit varies with date of installation.
(6) There are two aspects of eligibility (i) eligibility of any particular item to avail capital goods credit and (ii) quantum of credit eligible. Here both the above criteria were clear i.e. to say that the particular item was qualified as "Capital goods" and the quantum eligible credit was 75% of the duty paid. Hence there was no dispute about the eligibility. Accordingly, the appellant is eligible for only 75% of the duty paid and subsequently they do not have any right to change their stand until otherwise any Notification in this regard has been issued extending the benefit retrospectively. Notification No. 11/2000 is only prospective in nature.
4.1 The learned SDR also invited our attention to the judgment in the case of Binani Cement Ltd. vs. CCE, Jaipur-II reported in 2002 (143) ELT 577(NRB-New Delhi) wherein it is held that vested right of taking credit arises on the date of receipt of goods and date of installation of goods capital goods) being a deferred date of taking credit for administrative reasons, credit eligible on the date of receipt of goods. The learned SDR therefore, submitted that the impugned order is legal and proper and she prayed for up-holing the same and rejection of the appeal.
5. We have considered the rival submissions, gone through the case records and perused the various case laws cited. We observe that in this case the following facts are undisputed :
(a) The capital goods were received in the factory before 29.02.2000 when the credit permissible was 75% of the duty paid on the capital goods.
(b) Rule 57Q was amended by Notification No. 11/2000 dated 1st March 2000, when the limit of eligible credit was removed, which means 100% was available with effect from 1st March 2000. The amendment removing the restriction of 75% does not have retrospective effect.
(c) The appellants became eligible to the credit before the amendment with effect from 1st March 2000, i.e. at the time of receipt of the goods into the factory.
(d) The goods were installed on 6.3.2000 i.e. the capital goods were installed in the factory after the amendment came into effect, though these were received before amendment.
6. From the narration of facts and the facts as noted above, we observe that the only issue that arises for consideration in the present appeal is whether the date of receipt of the goods in the factory or the date of availing the modvat credit is relevant to the quantum of credit admissible. We observe that this issue is no longer res integra as the issue has already been decided in favour of the Revenue by various decisions of the Tribunal such as :
(a) Binani Cement Ltd. vs CCE, Jaipur-II reported in 2002 (143) ELT wherein it has been held that vested right of taking credit arise on the date of receipt of the goods and that date of installation of the goods only being a deferred date of taking credit for administrative reasons. credit is eligible on date of receipt of the goods. In para 11 of Bench has agreed with the contention of the Revenue that Modvat Credit must accrue on the goods on the date of receipt in the factory and not on the date of installation.
(b) HEG Ltd. vs. CE reported in 1998 (100) ELT 133 (NRB-New Delhi) wherein it is held that Modvat Credit on capital goods can be utilized from the date of receipt of the goods is before its use in the installed plant.
(c) Hindustan Cables Ltd. vs. CCE Bolpur reported in 2001 (137) ELT 735 (ERB-Kolkata) wherein it was held that Credit taken before installation of the goods is not deniable.
(d) Hind Spinners Industries Growth Centre vs. CCE reported in 1997 (96) ELT 656 (NRB-New Delhi) wherein it is held that Modvat Credit can be taken and utilized before installation of machine or accessories especially in factories already in existence and specified final product manufactured and cleared.
(e) Pudumjee Pulp & Paper Mills Ltd. vs. CCE reported in 1996 (87) ELT 557 (WRB-Mumbai) wherein it is held that credit can be taken after receipt of goods.
7. We also not that the appellants themselves in the written submissions has stated that "the moment capital goods were received in the factory, the credit was available". This undoubtedly means the assesses became eligible to the credit with effect from the date on which goods were received, though they may be taking the credit only on a later date when the goods are installed in the factory, as per their convenience. Therefore, the quantum that would be permissible has to be with reference to the date of receipt of the capital goods in the factory and note the date of installation or use.
8. In the instant case, the quantum of credit permissible was only 75% at the relevant time when the goods were received in the factory. It was on a later date the quantum was raised to 100% by amending Notification No. 11/2000 dated 1.3.2000 and this Notification is not retrospective. Therefore, we are of the considered opinion that the appellants are eligible to claim the benefit that was permissible on the date of receipt of the capital goods in the factory. In view of our discussion above, following the ration of the decisions cited supra, we hold that there is no ground to interfere with orders passed by the authorities below and we uphold the same and reject the appeal.
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