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Commissioner of Central Excise, Haldia Versus M/s. Shri Badrinarain Alloys & Steels Ltd.

2016 (9) TMI 369 - CESTAT KOLKATA

Modvat credit - capital goods installed and commissioned on 16.09.1997 when restricting clause got inserted in Table to Rule-57Q(1) under Notification No.33/97-C.E.(N.T.) dated 01.08.1997 - Held that:- it is observed that amendments/insertions to Rule 57Q(1) and Rule 57 S(11) were made simultaneously under Notification No. 33/97-C.E.(N.T.) dated 01.08.1997. From the above provisions of MODVAT scheme under Central Excise Rules, 1994 it transpires that intention of the legislature behind above ame .....

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AY] after relying upon the Apex Court's decision in the case of Eicher Motor Ltd. vs. Union of India [1999 (1) TMI 34 - SUPREME COURT OF INDIA], the Cenvat Credit of ₹ 24,13,708.68/- has been wrongly allowed by the First Appellate Authority. - Decided in favour of Revenue - Appeal No. E/143/2007, CO-32/2007 - Order No. FO/A/75996/2016 - Dated:- 8-9-2016 - Shri H.K.Thakur, Member (Technical) Sri A.Roy, Suptd.(AR) for the Appellant Sri R.S.Bajaj, CA for the Respondent ORDER Per Shri H. K. Th .....

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ucts , was amended by Notification No.33/97-C.E.(N.T.), dated 01.08.1997 to exclude capital goods credit if the same are used in the manufacture of Non-Alloy Steel Ingots and billets. That since on the date of commencing commercial production debarring clause was existing in table to Rule-57Q(1) of the Central Excise Rules, 1944, therefore, no capital goods credit was admissible to the appellant who was availing compounded levy scheme under Section 3A of the Central Excise Act, 1944. That furthe .....

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000. 3. Shri R.S.Bajaj (CA) appearing on behalf of the respondent argued that as per para-9 of CBEC Circular No.345/2/2000-TRU dt. 29.08.2000 credit of capital goods credit was admissible. That First Appellate Authority has correctly relied upon Apex Court s decision in the case of Eicher Motors Ltd.& Anr. v. Union of India &Ors. [1999 -(XC2)-GJX-0387-SC]. Learned CA also relied upon case law Nahar Industrial Enterprises Ltd.-vs.-CCE, Chandigarh[2004-(XC2)-GJX-2918-CESTAT]. 4. As a count .....

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(Supra) has been considered by Bombay High Court and has been distinguished. That in view of this case law credit of capital goods is not admissible to the respondent and Commissioner (Appeal) order is required to be set aside. 5. Heard both sides and perused the case records. The issue involved is whether respondent is eligible to take Modvat Credit on capital goods installed and commissioned on 16.09.1997 when restricting clause got inserted in Table to Rule-57Q(1) under Notification No.33/97- .....

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me was applicable to appellant, therefore, capital goods credit is not admissible and even if it was admissible prior to 16.09.1997 the same is deemed to have lapsed by virtue of Rule 57S(11) of the Central Excise Rules, 1944. Sr.No.1 of the table to Rule 57Q(1) of the Central Excise Rules, 1944, as amended by Notification No. 33/97-C.E.(N.T.) dated 01.08.1997 read as follows: TABLE S.No. Description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985(5 of 1986) a .....

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whether or not any other goods are produced in such induction furnace, and hot re-rolled products of non-alloy steel falling under sub-heading No.s 7211.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90 on which duty is paid under section 3A of the Central Excise Act, 1944 (1 of 1944).] 6.1. Rule 57Q(7) of the Central Excise Rules 1944 read as follows: (7) The credit of the specified duty on capital goods [other than those capital g .....

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LE 57S. Manner of utilization of the capital goods and the credit allowed in respect of duty paid thereon.- (1) . (2) . (3) . (4) . (5) .. (6) .. (7) .. (8) .. (9) .. (10) [(11) Notwithstanding anything contained in sub-rule (3) of rule 57Q, any credit of specified duty lying unutilised,- (a) on the first day of August, 1997, with the manufacturer of ingots and billets of non-alloy steel falling under sub-heading Nos.7206.90 and 7207.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 o .....

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16.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), and who is required to pay duty under section 3A of the Central Excise Act, 1944 (1 of 1944), shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or for export.] 7. Amendments/insertions to Sr.No.1 of Table to Rule 57Q(1) and Rule 57 S(11) were made simultaneously under Notification No. 33/97-C.E.(N.T.) dated 01.08.1997. From the above provisi .....

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er Motors Ltd. vs. Union of India (Supra) which was delivered when Section 37(1) (xxviii) was not existing. It was introduced in the Central Excise Act, 1944 as per Sections 131 and 132 of the Finance Act, 1999 with retrospective effect. Learned AR has correctly relied upon the case law of Coral Cosmetics Ltd. vs. Union of India (Supra) where Bombay High Court has noted Apex Court s decision in the case of Eicher Motor Ltd. vs. Union of India (Supra) and made following observations /distinction .....

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credit balance which was not taken away by substantive legislation. This lacunae came to be removed by Sections 131 and 132 of the Finance Act, 1999 and said sections have only made small repairs by adopting permissible mode of legislation. 31. The Central Government by Notification No. 57/97-C.E. (N.T.) dated 18th September, 1997 amended Rule 57-F by inserting clause (e) in sub-Rule (17) whereby unutilised Modvat credit lying to the credit of the assessee as on 1st October, 1997 was allowed to .....

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In other words, Sections 131 and 132 of the Finance Act have removed the illegality pointed out by the Supreme Court in the case of Eicher Motors Ltd. (supra), wherein the foundation on which the decision was based, has been fundamentally altered by the said provision. The Parliament, inter alia; validated clause (e) of sub-Rule (17) of Rule 57 of the said Rules with retrospective effect. 33. It is no doubt true that in Eicher Motors Ltd. (supra) the Apex Court ruled that the Modvat credit stan .....

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t which is, normally, held to be retrospective. A remedial Act, on the contrary, is not necessarily retrospective, it may be either enlarging or restraining and it takes effect prospectively, unless it has retrospective effect by express terms or necessary intendment, [see AIR 1960 S.C. 12 (Para 29) - The Central Bank of India and others v. Their Workman and also AIR 1973 S.C. 1227 - The Workmen of M/s. Firestone Tyre and Rubber Co. of India Pvt. Ltd. v. The Management and others.] Sometimes it .....

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slation, which was noticed by the Apex Court, stood removed by virtue of the said amendment. 8.1. Further Bombay High Court in the above case law made following observations in paragraphs 34 to 36 :- 34. In Allied Motors (P) Ltd. v. CI.T., (1997) 3 S.C.C. 472, certain unintended consequences flowed from a provision enacted by Parliament. There was an obvious omission. In order to cure the defect, a proviso was sought to be introduced through an amendment. The Court held that literal construction .....

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ion as a whole. 35. In the case of Krishnamurthi & Co. v. State of Madras, (1973) 31 STC 190, the Apex Court observed: The object of such an enactment is to remove and rectify the defect in phraseology or lacuna of other nature and also to validate the proceedings, including realisation of tax, which have taken place in pursuance of the earlier enactment which has been found by the court to be vitiated by an infirmity. Such an amending and Validating Act in the very nature of things has a re .....

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