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M/s Global Sugar Ltd. Versus Commissioner of Central Excise, Kanpur

2016 (4) TMI 797 - ALLAHABAD HIGH COURT

Availment of Modvat credit - Whether the applicant had adhered to the provision of Rule 57-T of the Rules in seeking a declaration for availing Modvat credit - Held that:- it is not disputed that the goods were received in the factory premises and was consumed for the purpose of erection of shades for boiler houses, etc. It is also not disputed that the goods so received showed evidence of payment of duty on such goods. When these two conditions are existing which are the mandatory requirement, .....

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ng Modvat credit and the moment they came to know applied for Modvat credit. The fact, that the applicant applied for Modvat credit has not been disputed. Once this is not disputed, it is not open to the respondents to deny Modvat credit on the ground that permission was not granted by the competent authority. There is no evidence that the application of the applicant was rejected. So, even if there is a procedural lapse, it does not mean that Modvat credit could not be availed. - By applyin .....

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ry provision. - Decided in favour of appellant - Central Excise Reference No. 3 of 2010 - Dated:- 15-3-2016 - Tarun Agarwala And Vinod Kumar Misra, JJ. ORDER ( Per: Tarun Agarwala, J. ) 1. This excise reference has been made pursuant to a direction passed by the Court on an application filed under Section 35-H of the Central Excise Act for interpretation of the following question of law: "Whether the interpretation of Rule 57-T(3) of the Central Excise Rules 1944 and its proviso given by th .....

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at credit amounting to ₹ 25,25,826.75 on the goods purchased by it without obtaining mandatory permission as provided under Rule 57-T(3) of the Central Excise Rules (hereinafter referred to as the Rules). Since the mandatory procedure was not followed the Modvat credit was disallowed by the Commissioner. The applicant filed an appeal, which was dismissed by the Commissioner. Thereafter the applicant filed a Central Excise Reference Application under Section 35-H, which was allowed by an or .....

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"Rule 57T - Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of the duty paid on the capital goods under Rule 57Q shall, before receipt of the capital goods, file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating therein the particulars of the capital goods, description of the final products manufactured in his factory and such further information as the Assistant Collector may requ .....

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the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year) or is chargeable to nil rate of duty and also that he shall not claim depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961), or as revenue expenditure under any other provision of the said Income-tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty paid on such capit .....

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. [(4) * * * * *] [(5) * * * * *] (6) The manufacturer shall be allowed to take the credit of specified duty only if the capital goods are received in the factory premises of the manufacturer under the cover of a document specified under rule 57G evidencing the payment of duty on such capital goods. (7) The Assistant Commissioner may, on sufficient cause being shown to him, allow the manufacturer to take credit of the specified duty on capital goods, paid by a contractor or job worker who undert .....

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he description of final product manufactured in its factory with the understanding that such capital goods could not be used exclusively for production of the final product which is exempted from the whole of the duty of excise leviable thereon. 5. Sub-section (3) of Rule 57-T of the Rules indicates that where a manufacturer could not seek a declaration, but subsequently files an application seeking a declaration, the same shall be considered by the Assistant Commissioner on sufficient cause bei .....

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g cause that they were not aware of the procedure for claiming declaration under the said Rule and have filed the same at the earliest opportune moment. It was contended that this is only a procedural/technical lapse and that the substantive right of Modvat credit could not be denied on account of such procedural/technical lapse. The claim of the applicant for Modvat credit was disallowed on the ground that mandatory permission as required under Rule 57-T was not granted by the competent authori .....

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hat the provision of Rule 57-G of the Rules was not mandatory and that it was only a procedural provision and if there was a procedural lapse, it could not mean that Modvat credit could not be availed. The same principle is applicable in the instant case. 9. We find that Modvat credit is basically a duty collecting procedure which allows relief to a manufacture on the duty element borne by him in respect of the inputs used by him. The object behind Rule 57-T of the Rules in the instant case is u .....

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e goods were received in the factory premises and was consumed for the purpose of erection of shades for boiler houses, etc. It is also not disputed that the goods so received showed evidence of payment of duty on such goods. When these two conditions are existing which are the mandatory requirement, in such case, Modvat credit should be allowed and could not be denied on the ground that there was a procedural lapse in not applying for a declaration within a stipulated period. 11. Sub-rule (3) o .....

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