2001 (6) TMI 455

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....Capital goods under Rule 57Q of Central Excise Rules. The Department had alleged that as the assessees were also manufacturing plain reel hanks/grey fabrics on which no excise duty was payable, they were not entitled for the credit of duty on the Capital goods under Rule 57R during the period from 1-3-1997 to 31-8-1997. However, the said rule was amended vide Notification No. 46/97-C.E. (N.T.), dated 1-9-1997 and therefore the Department alleged that during the above period, no credit of duty on the Capital goods was admissible under Rule 57R as they had also manufactured and cleared plain reel hanks/grey fabrics which were exempted from duty are chargeable to nil rate of duty. The Assistant Commissioner confirmed the show cause notice. How....

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....7-C.E. (N.T.), dated 1-3-1997 sub-rule (1) of Rule 57R prior to its amendment vide Notification No. 46/97-C.E. (N.T.) reads as follows :- RULE 57R. Credit of duty not be allowed or denied or varied in certain circumstances and adjustment in duty credit - (1) No credit of the specified duty shall be allowed on Capital goods which are used in the manufacture of final products (other than final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year) which are exempt from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty except when the final product is either - ....

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....ble for the credit of duty on the Capital goods during the period from 1-3-1997 to 31-8-1997. 5 In view of the above, I allow the appeals and set aside the orders passed by the lower authority. Sd/- (J.R. NEBHORTA) COMMISSIONER (APPEALS)" 2. We have heard ld. DR, Shri Arumugam who reiterates the pleas taken by the Department in the show cause notice and the order given by the Assistant Commissioner. He submits that the order passed by the Commissioner is not proper and legal in terms of the grounds of appeal as in the Budget 1997, the word "exclusively" was omitted from Rule 57R(1) and the same was re-introduced vide Notification No. 44/97-C.E. (N.T.), dated 1-9-1997. Hence, Capital goods are used for manufacture of both exemp....

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....p;On a careful consideration of the submission and perusal of the order of Commissioner (Appeals), we are of the considered opinion that the Commissioner (Appeals) has correctly arrived at the conclusion after properly analysing the provisions of Rule 57R and the amended Notification No. 46/97-C.E., dated 1-9-1997. The findings recorded are correct, legal and proper and there is no infirmity in the said orders. We are of the considered opinion that the final products in the present case was discharging duty which is not disputed in the grounds of appeal. For that reason, the plea now taken up by the Revenue that for the interim period they were not entitled to take Modvat credit as some of the Capital goods were duty free is not correct as ....