Tribunal allows appeal, grants capital goods credit for manufacturing dutiable products. No time limit for credit utilization.

The Tribunal allowed the appeal, setting aside the disallowance of capital goods credit amounting to Rs. 1,45,15,981/- on specific machines. It was established that although the machines were initially used for products with a NIL rate of duty, they were later used for manufacturing dutiable products. The Tribunal emphasized that there is no time limit for utilizing credit on capital goods and held that the credit was admissible for manufacturing dutiable products in subsequent phases. The decision was supported by relevant circulars and previous orders, with no rebuttal from the Revenue.

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Issues involved: Disallowance of capital goods credit on Circular Knitting machines and Flat Bed Knitting machines u/s Rule 57R(1) of the Central Excise Rules, 1944.

In the present case, the appeal arose from the order of the Commissioner of Central Excise (Appeals) disallowing capital goods credit amounting to Rs. 1,45,15,981/- on specific machines during a certain period. The disallowance was based on the grounds that the machines were used exclusively for manufacturing products chargeable to NIL rate of duty, thereby attracting the bar under Rule 57R(1) of the Central Excise Rules, 1944.

Upon hearing both sides and examining the evidence, it was established that the capital goods in question were initially used for products chargeable to Nil rate of duty, but were later utilized for manufacturing products subject to duty. The Tribunal referred to a previous decision where it was held that there is no time limit for the utilization of credit on capital goods, and such credit can be utilized for manufacturing dutiable products in subsequent phases. The Tribunal also considered relevant circulars and previous orders to support its conclusion.

Based on the above analysis and noting the absence of any rebuttal by the Revenue, the Tribunal held that the capital goods credit in question was admissible to the appellant. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed.

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