TMI Blog2006 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ll (HSM) - Phase II project during the year 2001-2002. In terms of provisions of Rule 4 (2) of the Cenvat Credit Rules, 2001/2002, they availed 50% of the duty paid on the said capital goods as credit. There is no dispute about the availment of said Modvat credit. Balance 50% of the credit was availed by them in the subsequent Financial Year i.e. on 11-4-2002. The dispute relates to the said availment of credit. As per the revenue, the appellant was not entitled to avail the said credit of 50% in the year 2002-2003 inasmuch as the capital goods were still at the stage of erection and had not been actually put to use. 2. On the basis of the above facts, they were issued with show cause notices on 6-5-2003 and on 1-9-2003 proposing denial o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the possession of the said goods with the manufacturer. The main issue is the phrase "use "appearing in the Rules. In this context, I observe that the Rule explicitly states that the balance 50% credit can be availed only if the capital goods are in the possession and use of the manufacturer'. Hence, there is no doubt that the legislature envisaged that the credit should be availed after the capital goods are actually put to use, i.e., to defer the availment of balance credit till the said capital goods were actually put into use in the scheme of production of final products. Otherwise there would have been no need to specify the word "use" in the said Rule. If it were not the intention of the legislature that the capital goods should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession and use of the manufacturer of final products in such subsequent years". The expression "use of" has been interpreted by the Hon'ble Supreme Court in the case of State of Haryana v. Dalmia Dadri Cement Ltd. [2004(178) E.L.T. 13 (S.C.)], as also in the case of BPL Display Devices Ltd. v. CCE [2004 (174) E.L.T. 5 (S.C.)]. Reliance has also been placed upon various other decisions. We would like to re-produce the extract of relevant Rules 4(2)(b) of the Cenvat Credit Rules:- "The balance of Cenvat credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, if the capital goods, other than components, spares and accessories, refractories and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % credit as long as the goods are in his possession and use of the manufacturer of the final products and has not been sold or cleared' from his factory. As long as the capital goods are lying in the factory meant for installation and future use in the manufacture of the final products, they have to be treated as in possession and use of manufacturer. 7. Support for arriving at the above conclusion can also be drawn from the fact, that the expression "use of" is associated with the "manufacturer" of the final products and not with the final products as in clear distinction to the expression used in some of the Modvat Rules as "use in the manufacture of the final products", where the use is definitely linked with the final products. As suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installation of the capital goods. While dealing with an identical expression appearing in Rule 57AA(a) of Modvat Credit Rules, the Court observed that the words 'used' occurring in this sub-rule does not postulate a specific condition of actual use of the goods in question, but as descriptive in the sense that the goods should ultimately find use. Reference was also placed upon the clarification in the Trade Notice contained in the Circular No. B-4/7/2000-TRU, dated 3-4-2000 of the Ministry of Finance, reproduced in 2000 (117) E.L.T. 337 laying down that Cenvat Rules do not provide installation of capital goods as a pre-requisite for taking Cenvat credit. 10. Reference may be made to the another decision of the Tribunal in the case of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods are put to use. As such, it is essentially an issue of time of taking the credit and not eligibility of the credit, in which case the same could not have been denied to the appellants in toto. If not, available in 2002-2003, the same would become avail- able in any subsequent financial year, when the capital goods are actually installed and put to actual use. In such a scenario, the worst allegation against the appellants could be prematurely taking the credit thus entitling the revenue to the interest on the same for use of the credit during and in between the period. But this definitely cannot lead to denial of credit to the appellants. 13. Apart from holding that the credit was admissible to the appellants on merits, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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