2005 (1) TMI 526

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....before the Tribunal and that led to the confirming of duty against the assessee.  2.We have perused the records and heard both sides. We are satisfied that the appellant's contention merits acceptance. Accordingly our Final Order is recalled and we proceed to dispose of the appeal as under. 3.Both the appeals relate to a single issue i.e. the appellant's claim for Modvat credit in regard to the purchase, of a Diesel Engine from M/s. Wartsila Diesel Limited under Invoice No. 51, dated 28-2-1995. Appeal No. E/2551/1998 is by the assessee claiming that the full duty paid by them on the diesel engine (Rs. 43,02,885/-) was required to be allowed as credit and that Revenue authorities were in error in reducing the claim by Rs. 21,42,58....

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.....4 crores for the repairs. In addition, excise duty of Rs. 21,42,582/- which was payable on the parts used for the repair was also paid. The appellant claimed these amounts from the Insurance company and it is seen from the papers produced before us that the entire claim, including the Central Excise duty payable on the parts, was honoured by the insurance company on the condition that no Modvat credit shall be taken on the excise duty paid on the spare parts. Upon receipt of the diesel engine in their factory, the appellant took credit of the duty amount of Rs. 43,02,885/- paid on the diesel engine. The Revenue authorities started proceedings against this amount of credit which ended in the partial denial of credit. These appeals arise fro....

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....in the factory, inasmuch as even after repair the engine number and relevant specifications of the engine remained the same. We are, therefore, of the view that the appellants is entitled to credit of Rs. 43,02,885/- which was paid as duty on the diesel engine. We find no reason to hold that the subsequent repair and financing of that repair from insurance made credit not available. The repair and source of financing of the repair are entirely separate from the purchase of the diesel engine. Therefore, there was no requirement to take into account the insurance claim made by the appellant for the purpose of Modvat credit. In any case, the appellant is not making a claim for Modvat credit in respect of the duty of Rs. 21,42,582/- paid by it ....