TaxTMI 
TaxTMI 
2004 (2) TMI 561
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....000/- under Rule 173Q(1)(bb) ibid. 2. Brief facts of the case are that the appellants are engaged in the manufacture of automobile components falling under chapter sub-heading 8708.00 of the Schedule to the CETA, 1985 for M/s. Hyundai Motors (India) Ltd. (M/s. HMIL) and are discharging the duty liability for the automobile components manufactured and cleared by them. They also availed Modvat Credit in respect of inputs under the erstwhile Rule 57A and capital goods under erstwhile Rule 57Q of the CE Rules, 1944. Appellants herein have taken Modvat Credit in respect of machinery (capital goods) falling under chapters 84 and 85 of the CETA, 1985 to the tune of Rs. 1,09,39,967/- in their RG 23C Part II account which were lent by M/s. HMIL vide invoice No. 001 & 002, dated 2-6-98 under Rule 57Q based on their declaration under the Erstwhile Rule 57T(1) filed with the department. The said lending of the capital goods was based on an agreement titled "Leave & Licence Agreement" by which M/s. HMIL had removed the capital goods for the permissive possession of the manufacturer (appellants). While removing the capital goods, M/s. HMIL had reversed the applicable excise duties as per....
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.... attention to the order of the Mumbai-Bench of the Tribunal in the case of German Remedies Ltd. v. CCE, Goa, reported in 2002 (144) E.L.T. 606 wherein it was held that Modvat Credit not to be denied when available according to other provisions of rules, merely on ground of non-fulfilment of condition of Rule 57R(3). It was also held therein that appellants are not required to disclose whether they are owners of capital goods or not. He has further invited our attention to the order of the Delhi Bench of the Tribunal in the case of Rasandik Engineering Industries (I)Ltd. v. CCE, reported in 2003 (55) RLT 784. He further submitted that there was no suppression of fact involved as the assessee has filed RT 12 return as well as declaration under Rule 57T have been filed and the department was well aware of the activities carried on by the assessee. He has also submitted written notes relating to facts and law to the Court. It is inter alia stated therein that there is no requirement to state in the declaration filed whether the capital goods for which credit is claimed in the said declaration is acquired by purchase or otherwise and that from 17-6-94 (after CEN 236/94-C.E. (N.T.), date....
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....pital goods or not. (c) similar cases have been decided by the Tribunal in favour of the assessee as per the case laws cited supra. (d) Longer period of limitation cannot be invoked in this case as the appellants have filed RT 12 returns along with extract from RG 23 Part II and declaration under Rule 57T and hence the department was fully aware of the activities carried on by the appellants and no objection regarding ownership of the machines has been raised at that time and hence they were under the bona fide belief that credit would be available for such transfer. 7.  Examining the contention at serial No. 1 above, we observe that agreement which the appellants are purported to have entered into with the supplier of the capital goods was neither made available to the department at any time, nor to the Tribunal at the time of filing the appeal. Copy of the same was made available to the Court for the first time on demand by the Bench on the last date of hearing on 17-9-2003. The first page of the agreement is reproduced on the next page. THIS AGREEMENT is made and concluded at Irungattu....
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....mp paper itself is 18-1-1999 whereas the disputed period is 1/98 to 12/99 as mentioned in the Appeal format. Therefore, the date of execution of agreement cannot in any case be before the date of purchase of stamp paper itself. The agreement runs into seven pages and all the pages have been signed by both the parties without indicating the date of signature anywhere. Even the signature of the authorised signatory who has signed on behalf of M/s. HMIL on pages 1 to 6 is not the same person who has signed it on the concluding page i.e. last page as could be seen from the last page reproduced below. 16 CAPTIONS The captions herein are included for convenience of reference only and shall not be used in the construction or interpretation hereof. 17 LEGAL EFFECT 17.1  In the event of conflict between this Agreement and the Basic Purchase Agreement, this Agreement shall prevail over the Basic Purchase Agreement only in respect of clauses contained in this Agreement concerning the permissive possession of the Specialized Tools by the VENDOR. In respect of all other clauses in this Agreement, the Basic Purchase Agreement shall prevail and binding upon the parties.....
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....hould be at least acquired by way of lease, hire purchase or loan agreement in order to avail Modvat credit on capital goods. 12. Coming to the next question regarding assertion by the learned Counsel that similar cases have been decided in favour of the assessee, we now proceed to discuss each case law cited by the Counsel. (a) Sharda Motors Industries v. CCE, Chennai-II reported in 2002 (150) E.L.T. 759 (Tribunal) = 2002 (51) RLT 33 (CEGAT-Del.). In this case, the assessee was taking Modvat Credit in respect of capital goods belonging to and received from M/s. Hyundai Motor India Ltd. under leave and lease agreement. However, Modvat credit was allowed to the assessee relying on Central Board's Circular No. 263/8/89, dated 1-3-1989 which clearly specified that credit facilities would be available in case of purchase as well as stock transfer and also relying on the case law in the matter of Vimla Rolling Mills Pvt. Ltd. v. CCE, New Delhi reported in 1997 (20) RLT 753. On going through the facts in the case of Vimla Rolling Mills, it is observed that in that case in Appeal No. E/3203/93-NB Modvat Credit was allowed to the job wor....
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.... up of the transaction already done. (d) Rasandik Engineering Industries (I) Ltd, & Anr. reported in 2003 (55) RLT 784 (CEGAT - Del.). This decision has been rendered relying on the earlier decision in the case of German Remedies Ltd. (supra) and Sharda Motors Industries Ltd. (supra). We have already held above and the facts and circumstances in those two cases are not similar to the ones in the present case. Therefore, this decision is also not applicable to the present case. 13.  In view of the above facts and circumstances of the case, we are of the considered view that Modvat Credit on capital goods could be availed even if the assessee is not the absolute owner of the capital goods. However, to avail the Modvat Credit on capital goods, the assessee should be either the owner of the goods or the assessee should have acquired the capital goods on lease, hire purchase or on loan basis and there has to be a written valid agreement to evidence the above facts. 14.  As regards applicability of the bar of limitation for demand of duty, no doubt, the appellants have filed RT 12 returns and also declaration under Rule 57T, but the ....
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....The appellants have taken Modvat credit in respect of capital goods falling under chapter headings 84 & 85 in their RG 23C Part II account. The machineries were lent by M/s. HMIL after reversing the Modvat credit taken by them. The question is as to whether the appellants are entitled to take Modvat credit on the machinery utilized by them. The department proceeded on the ground that machineries supplied by M/s. HMIL is not by sale and appellants are not the owner of the same. In this regard, the appellants contended that ownership is not the criteria for the purpose of taking Modvat credit. It was pointed out that M/s. HMIL had already reversed the Modvat credit and that appellants are entitled to take Modvat credit on the basis of agreement and the receipt of capital goods. It is their contention that receiving goods in terms of relevant rules entails them to avail Modvat credit. The Commissioner in para-12.3 has held that Modvat/Cenvat credit is admissible in respect of goods only if they are owned by the assessees. This aspect of the matter is not correct for the reason that the issue pertaining to ownership being not necessary has already been dealt with by the Tribunal in the....
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....d and mandatory penalty under Rule 57U(6) is required to be reduced to Rs. 55,00,000/- and penalty imposed under Rule 173Q(1)(bb) is also required to be reduced from 10,00,000/- to Rs. 5,00,000/- as held by Member (Technical) for the reasons given in his order. OR "Whether the appeals are required to be allowed in terms of the order recorded by Member (Judicial) and to hold that appellants are entitled to the benefit of Modvat/Cenvat credit on the capital goods received by them from M/s. HMIL and that there is no suppression of facts and penalties are not imposable. Sd/- Jeet Ram Kait Member (T) Sd/- (S.L. Peeran) Member (J) 19.  [Order per : C.N.B. Nair, Member (T) (Oral)]. - I have perused the records and heard both sides in regard to the points of difference referred to the third member. 20. The dispute is about the eligibility of the manufacturer for Modvat credit in respect of capital goods not owned by him. In the present case, M/s. Iljin Automotive Pvt. Ltd., have obtained certain machinery in the nature of special purpose CNC Lathe machine, tool grinding machine etc. from M/s. Hyundai Motors India Ltd. The said machinery was rece....