Custom, Excise & Service Tax Tribunal
M/S. Ravishankar Industries Pvt. Ltd vs Cce, Puducherry on 19 June, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/398/2006
(Arising out of Order-in-Appeal No.44/2006 (P) dated 29.3.2006 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Ravishankar Industries Pvt. Ltd. Appellant
Vs.
CCE, Puducherry Respondent
Appearance Shri S. Murugappan, Advocate for the Appellant Shri B. Balamurugan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing / Decision: 19.06.2017 Final Order No. 41021 / 2017 Per Bench The issue that poses for consideration is whether the denial of MODVAT credit on capital goods imported by the appellant is admissible or not.
2. Brief facts of the case are that the appellants are engaged in manufacture of photographic positive film, photographic paper which fall under Chapter 37 of CETA, 1985. They availed credit of Rs.15,24,584/- being duty paid on the goods classified under Customs Tariff Heading 9801.00 of the Customs Tariff Act which were imported under Project Import Regulation, 1986. The department entertained a view that these goods were not specified in Rule 57Q of the Central Excise Rules, 1944 and therefore the appellants are not eligible for credit. A show cause notice dated 3.6.99 was issued to the appellant proposing to deny the credit and also for imposing penalties. After due process of law, the original authority vide order dated 1.12.1997 allowed the credit for the reason that the goods imported under Project Import Regulation are used for the manufacture of final products classifiable under Heading 3703.10, 3702.20 and 3702.00 which is specified in Rule 57Q of Central Excise Rules, 1944. The department carried the issue in appeal before the Commissioner (Appeals) and vide Order-in-Appeal dated 20.2.2004, the Commissioner (Appeals) allowed the departments appeal directing the appellants to furnish the certificate as prescribed under CBEC Circular 351/67/97-CX dated 5.11.1997. The appellant, thus, furnished the necessary certificate issued by an independent Cost Accountant vide letter dated 17.3.2004. They had also filed an application for extension of time to produce the certificate. After hearing the appellant, the Commissioner (Appeals) however held that the certificate is not proper and that it does not comply with the CBEC Circular and disallowed the MODVAT credit. Hence this appeal.
3. On behalf of the appellant, learned counsel Shri S. Murugappan adverted to paragraph 12 and 13 of the impugned order. He submitted that the Commissioner (Appeals) observed that there was a delay of 60 days in filing the certificate as directed. That the appellant had already requested for extension of time and therefore the MODVAT credit ought not to have bee disallowed. The second reason for which the Commissioner (Appeals) rejected the certificate was that the certificate only contained a verbatim reproduction of description, Customs Tariff classification, assessable value etc. from the Bill of Entry without intimating the related Central Excise Tariff Heading. He relied upon the CBEC circular and submitted that the said circular gives the proforma of certificate for claiming the MODVAT credit on capital goods imported under Project Import Regulations, 1986. The appellants having furnished the certificate which satisfied the requirements stated in the proforma certificate, the Commissioner (Appeals) ought not to have disallowed the credit.
4. Against this, the learned AR Shri B. Balamurugan submitted that in the certificate produced by the appellant, they have not specified the description of the capital goods and the Central Excise Tariff Heading applicable to the said goods. That therefore, it is not possible to identify whether the imported goods fall within the definition of capital goods and is eligible for the MODVAT credit.
5. We have heard the submissions made by both sides and also perused the certificate produced by the appellants in order to claim the MODVAT credit as directed by the Commissioner (Appeals) in the first round of litigation. In the column of description of capital goods, the appellant has stated that these are machinery and parts, coating machine and ancilliary equipment, perforator squarness gauge. Rule 57Q of the erstwhile Central Excise Rules, 1944 defined capital goods. Sub-clause (a) of the said definition states that capital goods means machines, machinery, plant equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. Thus, machineries fall within the definition of capital goods. The Circular states that the crucial test for allowing MODVAT credit would be whether the capital goods were covered either in terms of classification or description of capital goods as defined in Explanation to Rule 57Q. From the description of the goods given in the certificate produced by appellants, we are convinced that these are machines, machinery etc. or parts and accessories of such machineries which would fall within the definition of Rule 57Q. It is also to be seen that the said Circular has been issued as there was confusion in the field whether credit of additional duty of customs can be allowed on capital good classified under Heading 98.01 of the Customs Tariff Act. The relevant portion of the circular is reproduced as under:-
7. However, difficulties may be experienced in some cases, in arriving the exact amount of the credit which is eligible for Modvat credit, where separate invoices indicating the c.i.f. value of eligible capital goods, are not available. To overcome the said difficulties, it has been decided to accept a certificate in the proforma enclosed, issued by an independent Cost Accountant, for the purpose of allowing Modvat credit on the capital goods imported under the Project Import Regulations, after necessary verification by the Department. The assessees may be allowed credit of duty, based on the estimated value of such capital goods, calculated at the rate of additional duty of customs as applicable for project imports at the relevant point of time.
6. It is seen from the above, that due to doubts which arose as to whether credit is admissible on capital goods imported under Tariff Heading 98.01, as there was no corresponding Central Excise Tariff Heading, the circular was issued. The said circular also directed that on furnishing of certificate as given therein, the credit can be allowed. The appellants having furnished the certificate, there is no reason to disallow the credit. The impugned order disallowing the MODVAT credit is set aside and the appeal is allowed with consequential relief, if any.
(Operative portion of the order was
pronounced in open court)
(V. PADMANABHAN) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex
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