2003 (9) TMI 591 - AT - Central Excise

Tribunal modifies order on Modvat credit denial, penalty imposition due to lack of contestation

The tribunal upheld the denial of Modvat credit on the Data Processing machine due to lack of contestation at the initial stage. However, Modvat credit on ... Modvat/Cenvat - Modvat on capital goods Issues:1. Denial of Modvat credit on Data Processing machine2. Denial of Modvat credit on PVC Cable3. Imposition of penaltyAnalysis:1. Denial of Modvat credit on Data Processing machine:The appellant contested the denial of Modvat credit on the Data Processing machine, arguing that it should be considered a capital good eligible for credit under Rule 57Q. However, it was noted that the appellant did not dispute this before the Asstt. Commissioner and had actually reversed the Modvat credit earlier. The tribunal held that the eligibility of capital goods for Modvat credit cannot be reopened in appeal if not contested at the initial stage. Therefore, the denial of Modvat credit on the Data Processing machine was upheld.2. Denial of Modvat credit on PVC Cable:Regarding the denial of Modvat credit on PVC cables, the tribunal referred to an Apex Court decision in the case of Jawahar Mills, stating that credit on PVC cables cannot be denied. The tribunal found in favor of the appellant on this issue, allowing the Modvat credit on PVC cables.3. Imposition of penalty:The tribunal considered the imposition of a penalty in the context of the interpretation of the Modvat credit scheme on capital goods, noting that it was a new introduction. It was held that in such situations, a penalty was not warranted. Therefore, the penalty imposed was set aside.In conclusion, the tribunal modified the Commissioner (Appeals)'s order. Modvat credit on PVC cables was granted, while the credit on the Data Processing machine was denied. The appeal was partially allowed in these terms.