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2017 (12) TMI 1231 - HC - Central ExciseCENVAT/MODVAT credit - capital goods acquired on lease - Whether the Modvat Credit availed by M/s. Ispat Industries Ltd., on capital goods acquired by them on lease in terms of Rule 57(R)(3) of Central Excise Rules, 1944 can be availed prior to reimbursing the leasing company for the Excise Duty component or the same can be availed only after reimbursing the leasing company for the excise duty portion? Held that: - SubRule (3) basically provides that the credit of the specified duty paid on the capital goods shall be allowed to a manufacturer if the capital goods are acquired by the manufacturer on lease, hirepurchase or loan agreement, from a financing company subject to following the procedure provided in clauses (i) to (iv) in SubRule 3. The basic entitlement to avail credit is laid down in SubRule 3. Clauses (i) to (iv) lay down the procedure for availing of a credit. Subclause (b) of clause (ii) incorporates a requirement of producing a certificate from the financing company to the effect that the duty specified on such capital goods has been paid by the said manufacturer to such financing company prior to payment of first lease rental installment, or first hirepurchase installment or first installment of repayment of loan, as the case may be, along with a copy of the agreement entered into with the said financing company - The difference in SubRule (3) of erstwhile Rule 57R and SubRule (3) of Rule 57AC is crystal clear from the plain reading of both the SubRules. The procedure which is provided under SubRule (3) of Rule 57R is not provided in the amended provision. From the date of conversion, the procedure which is required to be followed as per subclause (b) of clause (ii) of Rule 57R(3) will not apply. As far as SBI is concerned, the admitted position which is recorded in paragraph 2.1 of the impugned order is that the excise duty was reimbursed under Rule 57R(3) and in particular SubRule (3) thereof. The finding recorded on the basis of admitted position is that there was no contravention. In paragraph 2.1, the Appellate Tribunal, after considering 57R(3) has rightly observed that the said provision does not contain any stipulation to the effect that credit on capital goods acquired on lease can be availed only after reimbursement of the excise duty component to the financing company. The clauses (i) to (iv) of SubRule (2) of Rule 57R provide for procedure and not a condition precedent. The finding of fact recorded is that till the date of conversion into NonConvertible Debentures, no installment was paid towards repayment to IFCI. A letter of IFCI placed on record shows that only interest was paid - As regards the impugned order subject matter of Appeal No.173 of 2008 is concerned, the same is dated 10th September 2017. By that time, the order dated 24th July 2006 was passed by the Appellate Tribunal on the Appeal preferred by Respondent assessee and on that ground, the Appeal has been dismissed. Appeal dismissed - decided against Revenue.
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