TMI Blog2005 (2) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ENNAI] has held that no restriction in time limit fixed for taking credit in respect of capital goods could be found by them. The decision in the case of Surya Prabha Mills Ltd. v. CCE, Coimbatore (supra) was therefore required to be followed by the Commissioner. The Commissioner's findings in this regard are therefore to be set aside. In the absence of an allegation specifically to be made in the Show Cause Notice that the demands of differential duty were to be made by reasons fraud, collusion, suppression of facts etc. with an intent to evade payment of duty, it is not now open for the Revenue to allege and deny credit under Rule 7(1)(b). In any case, the provisions as applicable on the date of receipt of capital goods when no such bar shown to exist in the relevant rules. The findings of the Commissioner do not specify the rules under which the availment of credit was prohibited under the Central Excise Rules, 1944. Under these circumstances, the order of the Commissioner which suffers from non application of mind also is required to be set aside and it is to be held that the provisions of Rule 7(1)(b) are not applicable in the facts and circumstances of this case. The inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme. As the Appellants were not able to fulfil the export obligation they paid Rs. 1,14,63,664/- by a TR 6 challan, dated 6-7-1998, 28-4-2000, 24-5-2000, 9-6-2000, 27-7-2000, 30-8-2000, and 29-9-2000 towards the Customs Duties. 4. A Show Cause Notice dated 29-2-2000 was issued by the Assistant Director, Directorate of Revenue Intelligence, Surat, proposing to demand differential duty of Rs. 3,76,27,226/- together with interest. The Appellants were further directed to show cause as to why the goods imported under the EPCG Scheme should not be confiscated under Section 111(o) of the Customs Act, 1962. without alleging fraud, collusion or wilful misstatement with intent to evade duty. 5. The Appellants applied to the Settlement Commission of Customs and Excise and admitted a liability of Rs. 3,85,99,469/-, being the differential duty in respect of the said capital goods imported by them under the EPCG Scheme. The Settlement Commission, vide their Final Order No. 33/2002-Cus., dated 8/9-8-2002 was pleased to settle the Appellants case by directing them to pay the sum of Rs. 3,85,99,469/- and it was further ordered to direct the Appellants to move the proper Central Excise Officer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2; (v) the capital goods have been imported duty free with export obligation and later on not fulfilling it, had contravened the provisions of Sections 111(d) and 111(o) of the Customs Act knowing well that at the time of making an application for the EPCG Licence that the export obligation was to be met and therefore, any subsequent non-fulfilment and subsequent non-payment of duty was deliberate and intentional; (vi) the goods were imported in 1995, and it was not possible at this stage to verify whether all or some of the goods had come into the factory and whether such goods had been used in the manufacture of specified products and that various conditions associated with the Scheme were fulfilled; (vii) Since the procedures were not followed of availment of credit on capital goods like declaration, intimation of receipt/installation, maintenance of statutory records under Rule 57Q and Rule 57T at the relevant time and therefore was not eligible for credit; (viii) that the challans on the basis of which the credit was claimed are not prescribed documents, as the goods having been imported in July 1995 and installed, but the settled amount was paid only in 2001-02, and the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the item, Iron and Steel Scrap from the deemed credit order), it cannot be held that credit was not available. Credit accrues to the manufacturer when the inputs are received and the provision applicable as on the date of such receipt would govern the situation." (underlining supplied) The C.B.E. C. vide Circular No. 345/2/2000-TRU, dated August 29, 2000 has also clarified by referring to Rule 57AC(2)(c) that - "9. Referring to sub-rule (2)(c) of Rule 57AC, it has been pointed out that there are cases in which the capital goods were received before the 1st day of April 2000 and also installed before that date. However, the Modvat credit on the capital goods was not taken for some reason prior to 1-4-2000. It has been pointed out that in this situation, not being covered under Rule 57AC, (2)(c), the duty paid on the capital goods causes burden to the manufacturer. It has also been reported in some cases that the inputs were received in the factory on or before 31-3-2000 but credit was not taken for some reason. It is clarified that in the situations mentioned, even though the Modvat credit was not taken by the manufacturer, the Modvat credit had been "earned" by the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be eligible in view of the case laws and the Board's instructions relied upon by the appellant and mentioned hereinabove and nothing contrary to that being shown Rule 9 of the Cenvat Credit Rules, 2001, inter alia, provided that any amount of credit "earned" by a manufacturer under the Central Excise Rules, 1944 shall be allowed as Cenvat Credit under the Cenvat Credit Rules, 2001. Similar provisions have been incorporated in Rule 9 of Cenvat Credit Rules, 2002. Therefore, the credit earned by the Appellants at the time of the receipt of the capital goods would be utilised by them under the Cenvat Credit Rules, 2002, and the Commissioner, Central Excise and Customs has erred in not considering the submission of the Appellants that they were entitled to credit in terms of Rule 9 of the Cenvat Credit Rules, 2002. Thus, the credit of CV Duty denied on the ground that the capital goods were not received on or after March 1, 2002 in terms of Rule 3(1) of Cenvat Credit Rules, 2002, is untenable in law and therefore cannot be upheld. (c) It is found from the copy of the order of the Settlement Commission dated 30-10-2003 that they have held that the appellants would be eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elate to credit on inputs and not on capital goods, as is the case herein. The decision in the case of Surya Prabha Mills Ltd. v. CCE, Coimbatore (supra) was therefore required to be followed by the Commissioner. The Commissioner's findings in this regard are therefore to be set aside. (h) It is well settled that credit cannot be denied on the ground of non fulfilment of procedural requirement (see Tribunal's decision in J.B.M. Tools Ltd. v. CCE, Pune - 2002 (144) E.L.T. 561 and application of the decision of the Supreme Court in the case of in Indian Aluminium Co. Ltd. v. Thane Municipal Corporation reported in 1991 (55) E.L.T. 454 (S.C.) relied upon by the Commissioner, which was rendered in the context of the Maharashtra Octroi Rules, 1988 and not in the context of the Central Excise Rules and the ratio thereunder cannot be applied in the facts of this case blindly. The Commissioner's findings in this regard are therefore to be set aside. (i) It is found that the provisions of Rule 7(1)(b) of the Cenvat Credit Rules, 2002 are not applicable in the present case as payment of duty was subsequent to a failure of export obligations requirement and the finding of the Commissioner tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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