2013 (4) TMI 205 - HC - Central Excise

Appeal Dismissed: Modvat Credit Upheld, No Merit Found in Appellant's Arguments

The High Court dismissed the appeal, upholding the judgments of the Commissioner (Appeals) and the CESTAT. The Court found no merit in the appellant's ... Wrong availment of Cenvat Credit - Availing Modvat credit of duty paid on capital goods as required under Rule 57-T(1), declaring that the said goods shall not be used for manufacture of excisable goods which is either exempted from payable of duty by notification or chargeable to nil rate of duty. - Held that:- The Commissioner (Appeals) had clearly held that the appellant's unit had been taken over by the ACGL which are manufacturing dutiable final products and the MODVAT credit on the capital goods in question was legally available to them in terms of Rule 57S(5) of the Central Excise Rules, 1944. This finding of fact was confirmed by the CESTAT. The contention of the Revenue that the credit of capital goods was inadmissible and no benefit could be given to M/s. ACGL under Rule 57S(5) was in terms rejected by both the authorities - The finding of the Assistant Commissioner that the said two units were separate, which finding was arrived at after interpreting the agreement between the parties, was not accepted and the said finding was in terms set aside. The appellant, therefore, had no right to challenge the concurrent finding of facts in this appeal - No case is made out for interference with the judgments and orders passed by both the Authorities - The appeal is dismissed in favour of Assessee. Issues Involved:1. Whether Notification No. 214/86-CE dated 25.03.86 and Notification No. 217/86-CE dated 02.04.1986 were in pari materia.2. Whether the interpretation of Rule 57Q read with 57T(1) and 57T(2) of the Central Excise Rules, 1944, without considering Rule 57R(1) of the said Rules, resulted in a miscarriage of justice.Issue-wise Detailed Analysis:1. Notification No. 214/86-CE and Notification No. 217/86-CE:The appellant contended that the CESTAT wrongly concluded that Notification No. 214/86-CE and Notification No. 217/86-CE were in pari materia. The appellant argued that the lower authorities erred in relying on the judgment in the case of Bajaj Tempo Ltd. vs. Collector of Central Excise, Pune, where both units belonged to Bajaj Tempo Ltd., unlike the present case where the respondent No.1 did not merge with respondent No.2. The Assistant Commissioner had found that the Modvat account lying in the excise account of Rudra Industries was to be responsible for its liabilities post-31.07.97, and no liability would fall on ACGL post the agreement dated 08.10.1997. The CESTAT, however, found that the plea to deny capital goods credit under Notification No. 214/86-CE was not in consonance with the Bajaj Tempo Ltd. decision, as both notifications were meant to avoid clerical work and facilitate Modvat credit implementation. The CESTAT affirmed that the mutuality in the two notifications and their pari materia nature with Rule 57C and Rule 57R was valid.2. Interpretation of Rule 57Q, 57T(1), and 57T(2) without Rule 57R(1):The appellant argued that the interpretation of Rule 57Q read with 57T(1) and 57T(2) without considering Rule 57R(1) led to a miscarriage of justice. It was contended that sub-rules 4 to 7 of Rule 57T, which came into effect from 01.03.1997, were erroneously applied to goods received before that date. The appellant maintained that the respondent No.1 had not followed the correct procedure under the earlier Rule 57T(1) and 57T(3), and the goods were not accounted for properly until 03.05.97. The Commissioner (Appeals) and the CESTAT, however, found that the appellant's unit had been taken over by ACGL, which was manufacturing dutiable final products, and thus, Modvat credit on the capital goods was legally available under Rule 57S(5). The CESTAT held that the factual findings of the Commissioner (Appeals) were confirmed and that the Assistant Commissioner's findings were misconstrued and set aside.Conclusion:The High Court dismissed the appeal, affirming the judgments of the Commissioner (Appeals) and the CESTAT. The Court found no substance in the appellant's submissions, noting that the substantial questions of law were not pressed. The concurrent findings of fact by the Commissioner (Appeals) and the CESTAT, which confirmed that the appellant's unit had been taken over by ACGL and that Modvat credit was legally available, were upheld. The reliance on the Apex Court judgment in Commissioner of Central Excise, Indore vs. Cethar Vessels Limited was found inapplicable to the facts of the present case. The appeal was dismissed as no case was made out for interference with the judgments and orders of the lower authorities.