1998 (6) TMI 235 - AT - Central Excise

Tribunal reinstates Order-in-Original, denies Modvat credit for machinery pre-1994, emphasizes marketability.

COMMR. OF C. EX., COIMBATORE Versus SINGARAVELAR SPINNING MILLS (P) LTD.

COMMR. OF C. EX., COIMBATORE Versus SINGARAVELAR SPINNING MILLS (P) LTD. - 1999 (105) E.L.T. 630 (Tribunal) Issues involved:1. Availability of Modvat credit under capital goods for carding machine and speed frame.2. Marketability of carded/combed cotton as goods.3. Retrospective applicability of Notification No. 60/94 (NT), dated 21-10-1994.4. Interpretation of Rule 57Q with Rule 57-S.5. Additional issues in Appeal No. E/1255/96 regarding credit availability on various items and procedural correctness.Detailed Analysis:1. Availability of Modvat credit under capital goods for carding machine and speed frame:The core issue is whether Modvat credit is available for carding machines and speed frames used in manufacturing carded/combed cotton, an intermediate product exempted from duty. The Revenue argued that credit is only available post-omission of Chapter Heading 52.02 from Rule 57Q by Notification No. 60/94 (N.T.), dated 21-10-1994, and that no retrospective effect is mentioned. The Tribunal concluded that the machinery used for obtaining carded/combed cotton is not eligible for Modvat credit under Rule 57Q up to 20-10-1994.2. Marketability of carded/combed cotton as goods:The Tribunal evaluated whether carded/combed cotton sliver is marketable and thus qualifies as 'goods.' The Revenue provided evidence of sales to mills lacking in-house carding/combing facilities, indicating marketability. The Tribunal found this evidence compelling, noting continuous sales over time and the commercial necessity for such transactions. The respondents' technical opinions were deemed insufficient to counter this evidence. Thus, the Tribunal held that carded/combed cotton sliver is marketable and falls under Heading 52.02, making the machinery used to produce it ineligible for Modvat credit up to 20-10-1994.3. Retrospective applicability of Notification No. 60/94 (NT), dated 21-10-1994:The respondents argued that Notification No. 60/94 was clarificatory and should apply retrospectively. However, the Tribunal found no language in the notification indicating retrospective application. Adhering to settled law, the Tribunal refused to read any intendment into the notification, thus rejecting the respondents' plea for retrospective effect.4. Interpretation of Rule 57Q with Rule 57-S:The Tribunal noted that since the conclusions reached rendered the interpretation of Rule 57Q with Rule 57-S moot, no orders were passed on this issue.5. Additional issues in Appeal No. E/1255/96:Several additional issues were raised in Appeal No. E/1255/96, including:- Credit availability on parts of generating sets not covered by Rule 57Q.- Credit taken on quadruplicate copies of invoices.- Credit for sapecostat oil, not considered capital goods under Rule 57Q.- Procedural correctness regarding items not appealed against in the Order-in-Original.- Credit taken on documents not in the respondent's name.- Disallowance of specific credit amounts not appealed against.The Tribunal restored the Order-in-Original, thereby addressing these issues without further orders. The unintended mistakes in the impugned order were rectified, and the procedural correctness was upheld.Conclusion:The Tribunal set aside the two impugned Orders-in-Appeal, reinstating the Order-in-Original and allowing the two Revenue appeals. The findings emphasized the non-eligibility of Modvat credit for machinery used in producing carded/combed cotton up to 20-10-1994, the marketability of the intermediate product, and the non-retrospective application of Notification No. 60/94.