Customs, Excise and Gold Tribunal - Tamil Nadu
Commr. Of C. Ex. vs P.M.P. Textiles Spinning Mills Limited on 7 November, 1997
Equivalent citations: 1999(108)ELT698(TRI-CHENNAI)
ORDER
V.P. Gulati, Vice President
1. The issue in the appeal relates to the benefit of the Modvat credit in respect of machines which are used in the manufacture of cotton yarn falling under Tariff Heading 52.02. The machines were received by the respondents during the period from April '94 to October '94, before the issue of Notification 60/94, dated 21-10-1994 under which the Tariff Heading 52.02 as the notified finished product came to be introduced. Prior to this notification, Tariff Heading 52.02 was not a specified Tariff Heading for Modvat purposes in respect of capital goods. The learned lower authority while holding that the benefit would not be available at the time when the goods were received, the respondents would be eligible to the benefit after 21-10-1994 and the Modvat credit in respect of the machines in question received prior to 21-10-1994 at a reduced level would be available in respect of these machines from 21-10-1994 by proportionate reduction of Modvat credit at the rate of 21/2% per quarter.
2. The learned JDR has pleaded that under similar circumstances the Tribunal has held that when the Modvat credit at the time when the goods were received was not available, subsequently, these machines cannot be taken into reckoning for Modvat purposes when a particular item under which the goods which were produced by these machines came to be notified. He has pleaded, therefore, the learned lower authority order allowing Modvat credit in respect of the machines received prior to 21-10-1994 is not sustainable. He has pleaded that the goods were found to be marketable and the Modvat eligibility has to be determined with reference to the time when the goods were received in the factory.
3. The learned Representative of the appellants Shri B. Ilango, has pleaded that as it is the goods were not marketable and that the cotton yarn which is manufactured is from the cotton which goes through the stage of combing and carding and without the goods coming in the form as above at the intermediate stage, the cotton yarn could not be manufactured. He has pleaded, therefore, the use of this could be taken to be in relation to the cotton yarn and the benefit of Modvat credit should be given and he has adopted the reasoning of the learned appellate authority in support of his plea.
4. I have considered the pleas made by both the sides. It is observed that the goods have been held to be marketable by the learned lower authority. The appellants have not filed any cross appeal against this finding. This finding, therefore, have become final. The issue, therefore, has to be considered is whether the machines in which certain excisable goods can be taken to be as eligible capital goods for Modvat purposes. The admitted position is that the goods as produced in these machines fall under Tariff Heading 52.02 which was not notified at the relevant time when machines were received in the appellants factory. This Tariff Heading came to be notified only by issue of Notification 60/94-C.E.(N.T.). The learned lower authority has also accepted that at the time when the goods were received, the Modvat credit could not be allowed. He has, however, allowed the Modvat credit with effect from 21-10-1994 reducing the available Modvat credit based on the duty paid by 21/2% per quarter for use of capital goods in the appellants factory prior to 21-10-1994.
5. I observe, the eligibility to the Modvat credit under Rule 57Q has to be determined at the time when the goods are received and if at the time of receipt the Modvat credit is not available, the particular machine cannot be taken into reckoning for grant of Modvat credit even if subsequently the particular machine comes within the purview of the definition of capital goods by amendment of Rule 57Q.
6. In view of the above, I hold that the learned lower authority could not have allowed the Modvat credit, as held above and the appeal of the revenue has to be allowed.