Custom, Excise & Service Tax Tribunal
M/S Kirloskar Toyoda Textile Machinery ... vs Commissioner Of Central Excise, ... on 14 November, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE Final Order No. 22030 / 2014 Appeal(s) Involved: E/376/2008-SM [Arising out of the Order-in-Appeal No. 23/2008 dated 30/01/2008 passed by the Commissioner of Central Excise (Appeals I), Bangalore] M/s KIRLOSKAR TOYODA TEXTILE MACHINERY LTD PLOT NO.10-13, JIGANI INDUSTRIAL AREA, II PHASE, ANEKAL TALUK, BANGALORE-562106. Appellant(s) Versus Commissioner of Central Excise, BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE - 560001. Respondent(s)
Appearance:
S/Shri Raghavendra. B. and Harish.R., Advocates For the Appellant Mr. R. Gurunathan, A.R. For the Respondent CORAM :
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER ________________________________________ Date of Hearing: 14/11/2014 Date of Decision: 14/11/2014 Per B.S.V. MURTHY Brief facts of the case are that the appellants are inter alia engaged in the manufacture and sale of textile machinery and parts. Their unit has been set up in collaboration with M/s Toyota Industries Corporation, Japan and they commenced their operations at Jigani in the year 1996. The appellants procured large numbers of capital goods and inputs through import as well as from indigenous sources. The capital goods/inputs were received directly at the factory site and were installed in the factory premises. They manufacture the final products viz., textile machinery and parts using the capital goods/inputs and take credit of the duty paid on these capital goods/inputs which were received by them. The appellants Project office was situated at Jayanagar until 1997 and shifted their project office from Jayanagar to Jigani in the year 1997. During the subsequent years, they conducted reconciliation of all the machineries received and the amount of credit that was availed. They also noticed that various documents pertaining to the capital goods were lost in transit when their project office was shifted from Jayanagar to Jigani. It was also noticed during the reconciliation of accounts that they had not availed Modvat/Cenvat credit on certain capital goods amounting to Rs. 23,65,151/-.
2. Thereafter, the appellants requested the Divisional Deputy Commissioner to permit them to avail Cenvat credit and the Asst. Commissioner in his letter dated 7.7.2005, refused to permit them to avail the credit on the ground that the appellants have not followed statutory procedures as envisaged under Rules 57A/57G/57T of the central Excise Rules, 1944 and as per Rule 4(1) of Cenvat Credit Rules, 2002 contemplate availment of credit immediately on receipt of goods in the factory and since the appellants have sought to avail credit after several years, permission cannot be granted. After making efforts to explain to the Asst. Commissioner and making representation to the Commissioner, and on being advised to file appeal before the Commissioner (Appeals), the appellants filed an appeal before the Commissioner (Appeals). Thereafter, the Commissioner (Appeals) remanded the matter and as a result of remand, the matter was adjudicated by the Asst. Commissioner who passed an order denying credit and the appeal filed by them before the Commissioner (Appeals) was also rejected. Hence, the appellants are before me.
3. Learned counsel submitted that credit has been denied on the following grounds by the Commissioner (Appeals) :
(i) The appellant had neither filed the declaration under Rule 57Q bid nor followed the procedure prescribed under Rule 57T ibid;
(ii) It is incumbent on the appellant to comply with the conditions of law to enjoy the benefits envisaged therein;
(iii) The law does not bestow on the appellant the choice of enjoying rights without complying with their duties;
(iv) The Asst. Commissioner has no power to condone the delay beyond three months in filing the declaration under Rule 57T ibid;
(v) In the instant case, the appellant had not filed the declaration at all. Therefore, the appellant is not entitled to avail the credit;
(vi) The appellant has sought to avail the benefit of credit under the Cenvat Credit Rules, 2004, and to apply the provisions of rules made there under;
(vii) The basic condition is that the goods should have been received on or after 10.09.2004 and hence the appellants appeal is liable to be rejected;
(viii) Even the transitional provision does not apply as the instant issue does not involve credit lying in balance and hence the appellant is not entitled to avail the impugned credit;
(ix) The case laws cited by the appellant are not applicable to the facts and circumstances of the instant case;
(x) The time limit is applicable to claim the benefit of Modvat credit which is not followed by the appellant;
(xi) Under the provisions of General Clauses Act, 1897 and the Limitation Act, 1963, the claim made beyond a period of three years is time barred; and
(xii) The appellants claim for allowing credit on capital goods after a period of five years is liable for rejection.
4. I find that there is no dispute in this case that the appellants received capital goods in question in their factory and used them in the manufacturing process; the appellants were seeking permission to avail credit of duty paid on the capital goods; the availability of capital goods has been verified and Range Officer also certified that the appellants have not availed depreciation under Rule 57R of the erstwhile Central Excise Rules, 1944; an independent Chartered Engineer has conducted verification and certified the availability and use of the capital goods in the appellants factory.
5. It was submitted by learned counsel that there is no dispute that the appellant is eligible for Cenvat credit and denial is only on the ground that there was no advance declaration for prior permission to avail credit and procedure contravention in the form of not filing declaration under Rule 57 can be condoned. Learned counsel also relied upon the decision in the case of Commissioner of Central Excise, Chennai vs. ITC Ltd. [2008 (224) E.L.T. 226 (Mad.) wherein Honble High Court of Madras took the view that procedural lapse should not result in disallowing the credit and this decision was rendered applying Rule 57T of erstwhile Central Excise Act, 1944. In this case also, credit has been denied on the ground that provisions under Rules 57Q and 57T have not been followed. It was submitted that Rule 57Q did not require any declaration during the relevant period and on going through the rule, I find it so. As regards Rule 57T, no doubt, this rule provides for declaration before receipt of capital goods but in view of the decision of Honble High Court of Madras cited supra covering the issue, it is felt that as held by Honble High Court, it has to be treated as procedural lapse. Moreover, the credit can be taken immediately, it is not mean that credit cannot be taken at later date at all. Once the admissibility of credit is not denied and utilization of capital goods for the purpose for which they received is accepted and it has been held by Honble High Court that this has to be treated as procedural lapse, following the judicial precedence and discipline, I am inclined to allow the credit in this case. Accordingly, the appeal is allowed with consequential relief, if any, to the appellants.
(Operative portion of the order has been pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER /vc/