1998 (5) TMI 213 - AT - Central Excise

Tribunal denies Modvat credit for gear box pre-1995 amendment

The Tribunal ruled in favor of the Revenue, upholding the appeal and denying Modvat credit for a gear box under Rule 57Q of the Central Excise Rules. The ... Modvat on capital goods Issues:Challenge to order-in-appeal allowing Modvat credit for gear box under Rule 57Q of Central Excise Rules. Interpretation of Rule 57Q regarding capital goods eligibility before and after 16-3-1995 amendment.Analysis:The appeal challenges the order-in-appeal allowing Modvat credit for a gear box under Rule 57Q of the Central Excise Rules. The Commissioner of Central Excise (Appeals) had permitted the credit based on a previous Tribunal decision. The appellant argued that the gear box was not a generating set and, before 16-3-1995, components of electric generating sets were not covered for credit under Rule 57Q. They cited Notification No. 11/95-C.E. (N.T.) as disallowing credit for goods received before 16-3-1995.In response, the advocate for the respondents referred to a Tribunal decision stating that the amendment to Rule 57Q was clarificatory and had retrospective application. The advocate also cited other Tribunal decisions supporting retrospective effect for such amendments. However, the Departmental Representative (DR) referred to a Supreme Court decision emphasizing that not all amendments are clarificatory and retrospective.The Tribunal analyzed the case concerning the gear box received in September 1994 and the subsequent show cause notice disallowing credit based on Rule 57Q. The definition of capital goods under Rule 57Q before 16-3-1995 included generating sets specifically, excluding parts of generating sets. The Tribunal noted that the gear box did not fall under capital goods for Rule 57Q before the 1995 amendment.Notification No. 11/95-C.E. (N.T.) amended Rule 57Q, specifying that no credit would be allowed for capital goods received before 16-3-1995 unless eligible under previous rules. The Tribunal concluded that the gear box was not eligible for credit before the amendment and upheld the Revenue's appeal. The Tribunal disagreed with the Commissioner of Central Excise (Appeals) and ruled in favor of the Revenue based on the interpretation of Rule 57Q and the specific provisions of the amending notification.