1999 (12) TMI 187 - AT - Central Excise

Tribunal overturns decision disallowing Modvat credit, emphasizes fairness in appeals

The Tribunal set aside the Commissioner's decision disallowing Modvat credit and imposing a penalty, remanding the matter for fresh consideration. The ... Appeal - Additional ground Issues:- Disallowance of Modvat credit by the Commissioner of Central Excise- Levying of penalty under Rule 173Q of the Central Excise Rules- Classification of items like beams, channels, plates, etc., as capital goods under Rule 57Q- Arguments regarding the applicability of Rule 57D and Notification 57/95- Consideration of new arguments raised during the appeal processAnalysis:1. The appeal was filed against the order disallowing Modvat credit of Rs. 3,49,64,830 covered by four show cause notices and imposing a penalty under Rule 173Q. The Commissioner held that materials like M.S. Angles, M.S. Plates did not qualify as capital goods under Rule 57Q. The items in question were used for erection of structural sheds, not for direct production of final goods, leading to the disallowance of Modvat credit and penalty imposition.2. The appellant argued that certain items, like CTD used for civil foundation work, were essential for the functioning of plant and machinery, qualifying as capital goods under Rule 57Q. They contended that these items were either part of the plant and machinery itself or could be considered as components, spare parts, or accessories under Explanation 1(a) and 1(b) of Rule 57Q. Additionally, they claimed entitlement to Modvat credit under Rule 57D (2) read with Notification 57/95.3. The Department argued that the items under consideration were used for creating immovable property, which did not fall under excisable goods. They emphasized that inputs used for immovable assets embedded in the earth could not be classified as capital goods. The Department relied on legal precedents and contended that the items in question did not qualify as raw materials or capital goods under Rule 57Q.4. The Tribunal reviewed the arguments presented during the appeal process, including new points raised by the appellant. Citing relevant legal principles, the Tribunal decided to set aside the impugned order to ensure justice. As the new arguments were not raised earlier, the matter was remanded back to the Commissioner for a fresh consideration according to the law.5. The Tribunal's decision was influenced by the need to address new arguments raised during the appeal, ensuring that all relevant aspects were duly considered. The judgment highlighted the importance of allowing additional grounds to be raised before appellate authorities to serve the purpose of collecting what is rightfully due to the government. The matter was remanded for a fresh assessment to uphold the principles of justice and legal procedure.