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TMI Blog2015 (12) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... tial question of law:- "i. Whether the Ld. Tribunal committed error in allowing the Modvat Credit of Goods which were received prior to 16.03.1995 by the Assessee and which were not covered under the definition of Capital Goods prior to 16.03.1995 and whether the said goods were eligible for Modvat Credit under Capital Goods vide Notification No.11/95- CE(NT) dated 16.03,1995?" 2. The facts stated briefly are that the respondent assessee availed Modvat credit of duty totally amounting to Rs. 32,45,712/- paid on capital goods received in the factory prior to 16th March, 1995 under cover of fifty five invoices. A show-cause notice dated 26th July, 1996 came to be issued to the assessee on the ground that they had wrongly availed Modvat cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order by placing reliance upon the findings recorded by the adjudicating authority whereby the adjudicating authority, on an interpretation of sub-rule (2) of rule 57Q of the rules as amended by the notification dated 16th March, 1995, observed that credit of duty paid on capital goods was allowable under rule 57Q of the erstwhile rules and even after amendment from 16th March, 1995, credit on duty paid on capital goods continued to be governed by the provisions of rule 57Q only. That the wordings of the amended sub-rule (2) clearly provided that credit in respect of specified item of capital goods given in clause (d) of Explanation I was allowable only if such credit was allowable under any other rule or notification prior to 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2010 passed by the Commissioner (Appeals), he, after appreciating the material on record as well as the relevant provisions of law, has recorded that the entire issue revolves around the interpretation of the expression 'capital goods' as contained in rule 57Q of the rules and the notification dated 16th March, 1995 whereby sub-clauses (d) and (e) were added to the Explanation to rule 57Q and sub-rule 57(Q)(2) came to be amended. The Commissioner (Appeals) after referring to rule 57Q of the Act, has taken note of the fact that sub-rule (2) of rule 57Q prescribes that no credit of specified duty paid on capital goods shall be allowed if such duty has been paid on such capital goods before 1st March, 1994. The Commissioner (Appeals) has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55 items), have been denied as they have been received by the appellant prior to 16.03.1995, while the said (d) and (e) have been added w.e.f. 16.03.1995. It is noticed that the notification No.11/95-CE(NT) dated 16.03.1995 has specified the chapter headings, which can not be meant that the capital goods covered under these Chapter Headings and received prior to 16.03.1995 were not covered under the definition of capital goods existed earlier. Thus, I find that the lower authority has not correctly interpreted the definition of the capital goods covered in the explanation to rule 57-Q of the said rules. As the subject 52 items were received prior to 16.03.1995 in the factory of the appellant, the amending provisions vide Notification No.11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of the appellant including these three items in question, hence, it is apparent that the respective authority accepted all 55 items as capital goods to be used by the appellant in view of the declarations. 10.4 Further to the more, as far as the burden of proving the functionality of these three items on the appellant is concerned as questioned by the lower authority, I find that after having acknowledged the declaration filed by the appellant, burden of proof lies on the shoulder of the department to disapprove the functionality of these items under the category of 'Capital Goods' which was never done. Hence, I find that there was no doubt with regard to scope of these 55 items under the category of 'Capital Goods' considering rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rules. The facts as emerging from the record reveal that even prior to 16th March, 1995, the goods on which the assessee had availed Modvat credit were capital goods as envisaged under rule 57Q of the rules. The subsequent notification dated 16th March, 1995 merely specifies the Chapter Headings and the capital goods. The amended sub-rule (2) of rule 57Q provides that notwithstanding anything contained in sub-rule (1), no credit of the specified duty paid on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 16th day of March, 1995) shall be allowable if such capital goods were received in the factory before the 16th day of March, 1995. On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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