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2015 (12) TMI 1209 - GUJARAT HIGH COURT

2015 (12) TMI 1209 - GUJARAT HIGH COURT - TMI - Denial of MODVAT Credit - Whether 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 - Held that:- there is no legal error in the impugned order passed by the Tribunal .....

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twithstanding 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 a plain reading of sub-rule (2) of rule 57Q of the rules, it is evident that credit of duty would be allowable on the capital goods .....

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terms of sub-rule (2) of rule 57Q. - it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law much less, a substantial question of law so as to warrant interference - Decided against Revenue. - Tax Appeal No. 801 of 2015 - Dated:- 28-10-2015 - Harsha Devani And A. G. Uraizee, JJ. For the Appellant : Mr YN Ravani, Sr Standing Counsel ORDER ( Per : Honourable Ms. Justice Harsha Devani ) 1. By this appeal u .....

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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 ₹ 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 not .....

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ory after 16th March, 1995. The showcause notice proposed to disallow and recover Modvat credit availed on capital goods from the assessee under the provisions of rule 57U of the rules read with section 11A of the Central Excise Act, 1944 along with penal action under rule 57 and rule 173Q(1)(bb) of the rules. By an Order-in-Original dated 13th October, 2009, the Joint Commissioner, Central Excise, Rajkot (hereinafter referred to as "the adjudicating authority") confirmed the demand of .....

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Tribunal, which came to be dismissed by the impugned order. 3. Mr. Y.N. Ravani, learned senior standing counsel for the appellant assailed the 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 .....

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"any other rule" and hence, the assessee s contention in this regard could not be accepted. Reference was made to the findings recorded by the Commissioner (Appeals) whereby he had, in relation to the question with regard to the burden of proving functionality of three items, held that after having acknowledged the declaration filed by the assessee, the burden of proof lies on the shoulder of the Department to disprove the functionality of the items under the category of Capital Goods .....

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passed by the Tribunal as well as the orders passed by the adjudicating authority and the Commissioner (Appeals). A perusal of the impugned order reveals that the Tribunal has mainly reaffirmed the findings recorded by the Commissioner (Appeals) and hence, it would be necessary to refer to the findings recorded by the Commissioner (Appeals). 5. As can be seen from the order dated 18th February, 2010 passed by the Commissioner (Appeals), he, after appreciating the material on record as well as t .....

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aid on capital goods shall be allowed if such duty has been paid on such capital goods before 1st March, 1994. The Commissioner (Appeals) has also referred to the provisions of the notification dated 16th March, 1995 and has recorded that in the impugned order, the adjudicating authority has denied the Modvat credit on fifty two items on the ground that they were received prior to 16th March, 1995 even as they were appearing in the newly inserted list of capital goods at Sr. No.(d) in the notifi .....

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e invoices issued during the period 23rd November, 1994 and 28th February, 1995. After considering the provisions of rule 57Q prior to the amendment as well as pursuant to the notification dated 16th March, 1995, the Commissioner (Appeals) recorded the following findings:- 10.1 On scrutiny of the amended explanation and sub-rule (2) of the Rule 57Q of the said rules in consideration with the Notification No.11/95-C.E.(N.T.) dated 16.03.1995, I observe that in the said notification at (d) and (e) .....

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rior 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.11/95-CE(NT) dated 16.03.1995 can not be made applicable to these 52 items. 10.2 Further, the sub rule (2) of .....

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noticed that the said items were received by the appellant in their factory prior to 16.03.1995 and the declarations in respect of all these 55 items were filed by the appellant prior to 16.03.1995. Further, it has further been observed that all these items were entered in RG23 C Pt. I Register prior to 16.03.1995. Moreover, the department has acknowledged the said declarations in respect of all these 55 items on 07.07.1995 which itself proves that the department had no objection at the time of .....

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ity 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 don .....

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allation, etc., observed that the items could be considered as capital goods without any doubt and found that all the fifty five items were entitled for availment of Modvat Credit as Capital Goods and that even those goods received before 16th March, 1995 were entitled for Modvat credit as capital goods. As regards the invocation of the extended period of limitation, the Commissioner (Appeals) found that the adjudicating authority had invoked the provisions of section 38A of the Act which came t .....

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