2000 (2) TMI 308 - AT - Central Excise

Summary

Issues:
- Availability of Modvat credit on machinery acquired on lease/loan after a specific date.
- Interpretation of Notification No. 27/94 NT regarding Modvat credit on capital goods.
- Relevance of the date of installation and commissioning for claiming Modvat credit.
- Impact of the date of filing the declaration on the eligibility for Modvat credit.
- Application of Rule 57Q(2) in determining Modvat credit eligibility.

Analysis:
1. The main issue in this appeal was whether Modvat credit would be available for machinery acquired on lease/loan after a specific date, even if the installation was completed after that date. The appellant argued that the cut-off date mentioned in Notification No. 27/94 NT allowed for Modvat credit on such machinery acquired on lease/loan. The machines in question were physically received before the cut-off date but installed and commissioned after it.

2. The appellant contended that the notification was clarificatory in nature and had a retrospective effect. They emphasized that the date of filing the declaration under the Modvat scheme was crucial for claiming credit, along with the installation and commissioning dates, as Modvat credit is linked to the utilization of machinery in manufacturing activities.

3. The respondent, on the other hand, argued that the notification introduced a new concept under the Modvat scheme, expanding the scope of Modvat credit on capital goods acquired on lease/loan. They highlighted that the word "acquired" in the notification implied completion of the transaction, including the date of the invoice and physical receipt of goods in the factory premises.

4. The Tribunal analyzed the notification and concluded that it enlarged the scope of the Modvat credit scheme to include capital goods acquired on lease/loan, not just outright purchases. The Tribunal held that the notification was not clarificatory but introduced a substantive benefit to the assessee, allowing Modvat credit for such acquired goods.

5. Regarding the date of filing the declaration and the dates of installation and commissioning, the Tribunal determined that the substantive right to avail Modvat credit arose from the notification itself, not the later conditions. The Tribunal emphasized that the date of acquisition on lease/loan was crucial, and in this case, the machinery was acquired before the notification was issued.

6. The Tribunal also dismissed the appellant's argument regarding Rule 57Q(2), stating that it pertained to the cut-off date for the original Modvat credit scheme on outright purchases and was not relevant to the expanded scope introduced by the notification. Ultimately, the Tribunal found no merit in the appeal and upheld the order-in-appeal denying Modvat credit, as the machinery was acquired before the notification's issuance.

This detailed analysis of the issues and arguments presented by both parties, along with the Tribunal's interpretation of the notification and relevant rules, led to the dismissal of the appeal challenging the denial of Modvat credit on machinery acquired on lease/loan before the notification's effective date.