TaxTMI 
TaxTMI 
2013 (8) TMI 576
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.... Excise Rules, 1944? c. Whether the Customs, Excise and Service Tax Appellate Tribunal, Chennai is correct in holding that Notification No.25/96-CE (NT) dated 31.08.1996 is not retrospective?" 2. The assessee is engaged in the manufacture of cement and clinker falling under Chapter 25 of Central Excise Tariff Act, (CETA) 1985. Admittedly, the assessee availed the benefit of modvat credit provided under Rule 57Q of the Central Excise Rules, 1944 on various capital goods. During the period from 23.7.1996 to 31.8.1996, the assessee was stated to have taken credit on components of capital goods falling under Heading 84.74 of CETA. As stated in Sub Rule (1)(a) to Rule 57Q, which stood amended under Notification No.14/96-CE dated 23.7.1996, the components, spares and accessories of the goods, being excluded from the list of eligible goods, would not qualify for any modvat credit. Hence, show cause notice was issued by the Superintendent calling upon the assessee to explain as to why credit of Rs.16,60,370/- taken on ineligible capital goods should not be disallowed/recovered under Rule 57U of Central Excise Rules, 1944. The assessee resisted this by contending that those components/spa....
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....at credit was liable to be rejected. 5. Aggrieved by this, the assessee went on appeal before Customs, Excise and Service Tax Appellate Tribunal, where the assessee took the contention that as Notification No.25/96-CE (NT) dated 31.8.1996 was clarificatory in nature, retrospective effect had to be given to the said amendment. Further, considering the fact that prior to 23.7.1996, the assessee had availed the benefit of modvat credit on components, spare parts and accessories thereof, that benefit should have been taken as available to the assessee in respect of those goods received during the disputed period, when Notification No.14/96-CE dated 23.7.1996 was in vogue. The claim of the assessee was however rejected by the Tribunal on the ground that Notification No.25/96-CE (NT) dated 31.8.1996 could not be taken as clarificatory in order to read retrospective effect to it to cover the period from 23.7.1996 to 31.8.1996 to grant the benefit of modvat credit in respect of those specified items, which were excluded from the list of eligible capital goods under Notification No.14/96-CE dated 23.7.1996. Aggrieved by this, the present appeal has been filed before this Court by the asses....
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....cts; Under Article 11/95, with effect from 16.03.1995, Clause (d) was inserted, excluding goods falling under Heading 84.74. "In the said rules, in rule 57Q- (i) in sub rule (1), - (a)... (b)... (d)following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer- (i) all goods falling under heading Nos.84.02, 84.05, 84.06, 84.11, 84.12, 84.16, 84.17, 84.19, 84.21, 84.23, 84.25 to 84.28, 84.80, 85.05, 85.35, 90.11, 90.12, 90.13, 90.16, 90.17 and 90.24 to 90.31: (ii)... (iii)... Under Notification No.14/96-CE dated 23.7.1996, there was further amendment: In the said rules, in rule 57Q - (i)in sub rule (1) for the Explanation, the following Explanation shall be substituted, namely:- Explanation For the purpose of this section, - (1) 'capital goods' means, following goods falling within the Schedule to be Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer, namely:- (a) all the goods falling under Chapter 84 (other than those falling under heading No.84.07 to 84.09, Compressors falling under heading No.84.14 and of a kind used in refrigerating and air-conditionin....
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....ings, it is apparent that goods falling under Heading 84.74 were not included therein for the purpose of treating it as capital goods for availing of modvat credit under Rule 57Q. Rule 57Q was further amended under Notification No.14/96-CE dated 23.7.1996, wherein, in sub rule (1), Explanation for 'capital goods' was substituted and the goods listed from clauses (a) to (d) as extracted above were brought under the definition of 'capital goods'. Once again, Heading 84.74 was omitted from the 'capital goods' definition for the purpose of Rule 57Q. The said rule was amended under Notification No.25/96-CE (NT) dated 31.8.1996. As a result, whatever benefit the assessee had had for the period prior to 23.7.1996, after the amendment under the Notification, the assessee could not claim the said benefit from 23.7.1996 to 31.8.1996. 11. In the circumstances, the assessee placed reliance on the circular issued by the Government of India dated 2.12.1996, in support of his contention that Notification No.25/96-CE (NT) dated 31.8.1996 was explained on the availability of modvat credit for the goods received during the disputed period too. Considering the hardship faced by the officers, the Gov....
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....at all parts, components, accessories, which are to be used with capital goods of clauses (a) to (c) of Explanation (1) of rule 57Q and classifiable under any Chapter heading are eligible for availment of Modvat credit. 5. Trade and field formations may be informed accordingly. 6. The receipt of the Circular may please be acknowledged. " 12. The assessee also placed reliance on the decision reported in 2010 (255) ELT 481 (Commissioner of Central Excise v. Rajasthan Spinning and Weaving Mills Ltd), wherein, the Apex Court, applying "user test" evolved in the judgment in Jawahar Mills' case, held that items used in the fabrication of chimney would fall within the ambit of "capital goods" and that the assessee was entitled to avail modvat credit in respect of the disputed items under Rule 57Q. In fact, the said decision was followed by this Court in respect of the assessee's own case on earlier occasion in C.M.A.No.3101/05 by order dated 13.12.2012. Having accepted the case of the assessee by applying the Apex Court decision reported in 2010 (255) ELT 481 (Commissioner of Central Excise v. Rajasthan Spinning and Weaving Mills Ltd), this Court rejected the Revenue's contention and a....