TMI Blog2013 (8) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... background of the circular issued by the Government of India that the benefit of modvat credit under Rule 57Q would be applicable to all components, spares and accessories of the specified goods, irrespective of their classification under any chapter heading – the assesse would also be eligible for relief – order of the CESTAT set aside – Decided in favor of assesse. - C.M.A.No. 4064 of 2005 - - - Dated:- 27-6-2013 - Chitra Venkataraman And K. B. K. Vasuki,JJ. For the Appellant : Mr. C. Saravanan For the Respondent : Mr. K. Mohanamurali, SCGSC JUDGMENT (Judgment of the Court was made by Chitra Venkataraman, J.) The following substantial questions of law are raised by the assessee in the present Civil Miscellaneous Appeal filed as against the order of the Customs, Excise and Service Tax Appellate Tribunal, Chennai passed in Final Order No.1028/2004 dated 10.11.2004:- "a. Whether the Customs, Excise Service Tax Appellate Tribunal, Chennai is correct in denying the credit on the disputed goods which were covered under Rule 57Q of the Central Excise Rules 1944 during the period from 23.7.1996 to 31.8.1996? b. Whether the Customs, Excise Service Tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e described under Rule 57Q in broader terms, namely, machine/ machinery equipments. However, with effect from 23.07.1996, the eligible capital goods were cpecified in terms of the Tariff Chapter Heading number and Sub Heading number. Since Heading No.84.74 was excluded from the list of eligible capital goods till 31.08.1996 when under the amendment to Rule 57Q by Notification No.25/96 NT dated 31.08.1996, goods under Heading 84.74 were once again brought under the eligible category, the assessee was not eligible to modvat credit under Rule 57Q. Thus, while allowing modvat credit of Rs.6,93,934/- under Rule 57Q, he disallowed modvat credit to an extent of Rs.9,66,435/-. 4. Aggrieved by this, the assessee went on appeal before the Commissioner of Customs and Central Excise (Appeals-II) by contending that the goods falling under heading 84.74 and received during the period from 23.7.96 to 31.8.96 were eligible for modvat credit by virtue of clarificatory Notification No.25/96-CE (NT) dated 31.8.1996. The Appellate Authority pointed out that amendment under notification No.25/96-CE (NT) dated 31.8.1996 including the heading 84.74 under the list of eligible capital goods, came into ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror in rejecting the assessee's claim. 7. Learned standing counsel for the Revenue, however, supported the order of the Tribunal and contended that in the absence of specific mention in clause (d) to Sub Rule (1) of Rule 57Q that it covered components, spares and accessories of the goods specified against items (a) to (c), the claim of the assessee could not be entertained. 8. Heard learned counsel for the assessee and learned Standing Counsel appearing for the Revenue and perused the materials available on record. 9. The issue that arises for consideration is as to whether the assessee would be entitled to credit in respect of goods falling under Heading 8474.90 on capital goods for the period 23.07.1996 to 31.08.1996. Rule 57Q deals with availing of Modvat credit on capital goods. Rule 57Q gives the definition of capital goods. The Explanation under Rule 57Q as it stood prior to 23.7.1996 and as it stood amended under Notification No.14/1996 dated 23.7.1996 and Notification No.25/1996 dated 31.8.1996, Notification No.4/94 CE dated 01.03.1994 gave the definition of capital goods in the explanation to Rule 57Q which reads as under: (1) "capital goods" means - (a) machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing sub clauses shall be substituted, namely:- (a) all goods falling under heading Nos.82.02 to 82.11; (aa) all goods falling under Chapter 84 (other than Internal Combustion engines falling under heading No.84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under heading No.84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub heading Nos.84.15, 84.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub heading No.8481.10 of a kind used for refrigerating and air-conditioning appliances and machinery); (ii)......" 10. It is seen from the above extract that originally Rule 57Q as it stood prior to 16.03.1995, was very general in character that the components, spare parts and accessories of the machines or appliances used for producing or processing of any goods were recognised as capital goods for availing modvat credit. The subsequent amendment to Rule 57Q under Notification No.11/95-CE (NT) dated 16.3.1995, however, inserted Clause (d) in the Explanation to the rule to specify a detailed list of various goods whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods. 2. It has been brought to the notice of the Board that clause (d) of Explanation (1) is being interpreted by some of the field officers covering only such components, spares and accessories which would fall under Chapters shown under clauses (a) to (c) and credit is allowed only on those components, spares and accessories which are covered under the said chapters. 3. The matter has been examined. With effect from 23.7.1996, capital goods eligible for credit under Rule 57Q have been specified either by their classification or by their description. Clause (a) to (c) of Explanation (1) of the said rule cover capital goods by their classification whereas clause (d) covers goods by their description viz. components, spares and accessories of the said capital goods. It may be noted that there is a separate entry for components, spares and accessories and no reference has been made about their classification. As such, scope of this entry is not restricted only to the components, spares and accessories falling under Chapters 82, 84, 85 or 90 but covers all components, spares and accessories of the specified goods irrespective of their classification. The same was the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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