2003 (12) TMI 235 - AT - Central Excise

Summary

Issues:
Dispute over Modvat credits taken by the appellants - denial of credits on capital goods and goods covered by specific invoices - interpretation of Rule 57R 3(ii)(b) - denial of credit on the ground of lack of entry in RG 23 Part I.

Analysis:
The dispute in this appeal revolves around the Modvat credits taken by the appellants, specifically regarding the denial of credits on certain capital goods and goods covered by specific invoices. The denial of credits, amounting to Rs. 23,21,193/- and Rs. 1,49,06,078/- respectively, was based on the failure to comply with the procedure outlined in Rule 57R 3(ii)(b). The appellants argued that this rule was only applicable to the acquisition of capital goods where the specified duty was financed by a Financing Company. They contended that the transactions in question did not fall under this rule as the specified duty was not financed by a Finance Company. The appellants further highlighted specific clauses in agreements to support their claim that the modvatable duty was excluded from the financing arrangement.

Regarding the denial of credit amounting to Rs. 21,217/- due to lack of entry in RG 23 Part I, the appellants argued that the goods were received as evidenced by various documents such as gate entry register, original invoices, payments made to the consignee, and computer entries in their books of accounts. They asserted that since the receipt of goods was not in dispute, there was no valid reason for the denial of credit. The appellants provided evidence to show that the goods were received and credit was duly noted in RG 23-Part II.

Upon review of the submissions and evidence presented, the Tribunal found that there was no justification for denying the credits in question. The capital goods acquired through lease were financed excluding the modvatable portion of duty, thereby not falling under the requirement of Rule 57R(3)(ii)(b). Similarly, goods acquired from Maruti Udyog were also deemed not to be subject to the rule. The Tribunal concluded that the denial of credits amounting to Rs. 2,12,407/- was unwarranted. Consequently, the appeal was allowed, and demands and penalties exceeding the interest demand of Rs. 3,71,610/- and penalty of Rs. 37,161/- were set aside as they were not contested by the appellants.