2005 (98) ECC 652 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member (J)

India Cements Ltd.

Versus

Commissioner of Central Excise, Trichy

Appeal No. E/997/2003

[Arising out of Order-in-Appeal No. 378/2003 (SCN) TRY-II, dated 23.8.2003 passed by Commissioner of Central Excise (Appeals), Trichirapalli]

Final Order No. 1028/2004, dt. 10.11.2004, Certified on 10.12.2004

Modvat Credit

Notification No. 25/96-CE(NT) dated 31.8.1996 -- Components barring `Calcinator Assembly' received prior to 1.9.1996, between 23.7.1996 and 31.8.1996, not eligible for capital goods credit on account of their classification under Heading No. 84.74 -- Revenue had no case that `Calcinator Assembly' not used for manufacture of final product, therefore, credit taken on Calcinator Assembly admissible to the assessee.

Appeal disposed of accordingly

PRESENT :

Shri V. Ravindran, Cons. for the appellant.

Smt. R. Bhagya Devi, SDR for the respondent.

Case Cited :

CCE v. Bihar Caustic and Chemicals Ltd., 2000 (118) ELT 196 (Tri.)...................... [Para 2]

Per : P.G. Chacko (Oral)

The appellants are manufacturers of cement. They had taken Modvat credit totalling to Rs. 8,31,138 on components of capital goods, many of these falling under Heading No. 84.74 of the Schedule to the Central Excise Tariff Act and the rest falling under Heading No. 73.08 of the said Schedule. The credits were taken during Jan.-Mar. '98. The original authority disallowed the entire credit to the assessee, holding that the components falling under Heading Nos. 84.74 and 73.08 of the Tariff Schedule were not eligible for capital goods credit under Rule 57Q prior to 1.9.1996. The appeal filed by the assessee against the decision of the original authority did not succeed. Hence, the present appeal of the assessee against the order of the first appellate authority.

2. Heard both sides. It appears from the records and submissions that the capital goods in question, barring one item, namely, "Calcinator Assembly" mentioned at S.No. 31 of the Annexure to the relevant show-cause notice, which was received in the appellants' factory on 14.7.1996, were received in the factory between 23.7.1996 and 31.8.1996. During this period, capital goods or components thereof falling under Heading No. 84.74 stood excluded from the category of eligible capital goods under Rule 57Q. It was with effect from 1.9.1996 that such exclusion was done away with by Notification No. 25/96-CE(NT) dated 31.8.1996. The question which arises for consideration in this context is whether Notification No. 25/96 had retrospective effect to cover the above period 23.7.1996 to 31.8.1996. Ld. Counsel has argued that this Notification was clarificatory and retrospective, for which purpose he relied on the Tribunal's decision in CCE v. Bihar Caustic and Chemicals Ltd., 2000 (118) ELT 196 (Tri.), wherein `tubes, pipes and fittings of iron and steel' were held to be covered by the definition of capital goods under Rule 57Q even prior to its amendment brought by Notification No. 25/96-CE(NT) ibid. Ld. SDR has opposed the Counsel's argument by submitting that the above decision of the Tribunal was based on clause 1(g) of the Explanation to Rule 57Q as amended by Notification No. 14/96-CE(NT) dated 23.7.1996 and, therefore, the decision cannot be applied to the instant case, wherein the assessee has canvassed Clause I(d) read with (a) of the Explanation ibid.

3. After examining the rival arguments, I find that, though Notification No. 25/96 was considered in the case of Bihar Caustic and Chemicals Ltd., the Bench had no occasion to examine the question whether the Notification was clarificatory or not. Tubes and pipes of iron and steel were specified for capital goods credit under Clause I(g) of the Explanation to Rule 57Q as amended by Notification No.14/96-CE(NT). This Clause remained as such even after amendment of the Rule by Notification No. 25/96-CE(NT) ibid and this is the reason why the Bench held in the case of Bihar Caustic and Chemicals Ltd. that, even prior to the amendment of Rule 57Q by Notification No. 25/96 tubes, pipes and fittings of iron and steel' were capital goods eligible for Modvat credit. The case law cited by Ld. Counsel nowhere held that Notification No. 25/96-CE(NT) was clarificatory and retrospective. No, other decision has been cited on the point by Ld. Counsel. As, in the instant case, all the components, barring "Calcinator Assembly", were received in the appellants' factory prior to 1.9.1996, they were not eligible for capital goods credit on account of their classification under Heading No. 84.74. The impugned order cannot be faulted in respect of these goods. However, the position is different with regard to "Calcinator Assembly" which was received in the factory prior to 23.7.1996. During the period, [i.e. period prior to the amendment of Rule 57Q by Notification No. 14/96-CE(NT)], all capital goods used for processing of goods one way or the other for the manufacture of final product were eligible for capital goods credit. The Revenue has no case that "Calcinator Assembly" was not used for such purpose. Therefore, the credit of Rs. 17,690 taken on "Calcinator Assembly" is admissible to the assessee. Barring this, the impugned order is upheld and this appeal is disposed of.

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