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2015 (6) TMI 154
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....o manufacture, in this case cabinets for television setsthe finished product, were supplied to the Assessee by the Original Equipment Manufacturers. The dispute relates to the years 199798, 199899. 3] A show cause notice came to be issued on 27th October, 1999 alleging that the assessee has availed and utilized inadmissible Modvat Credit on the moulds as capital goods to the tune of Rs. 35,49,659/in contravention of Rules 57Q, 57R(3) and 57(T) of Central Excise Rule, 1944. The show cause notice has been issued for the reason that the Assessee is neither owner of the capital goods nor has it hired the same on lease, hirepurchase or loan agreement from the financer. 4] The show cause notice was replied by the Respondents, pointing out that as alleged in the show cause notice, it was not necessary that the moulds should be owned by the assessee since Rule 57Q and 57R underwent amendments after 1994. 5] The provisions as were subsisting before the amendment read as under:" RULE 57Q. Applicability. - (1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the "final products") f....
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....ively for production of a final product which is exempt from the whole of the duty of excise leviable thereon (other than a final product which is 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) or is chargeable to nil rate of duty : Provided that the credit shall also not be allowed in respect of the components, spare parts and accessories of such capital goods which are used for the aforesaid purposes. (2) Credit of the specified duty allowed in respect of any capital goods shall not be denied or varied on the ground that any intermediate products have come into existence during the course of manufacture of the final product and that such intermediate products are for the time being exempt from the whole of the duty of excise leviable thereon or chargeable to nil are of duty : (3) No credit of the specified duty paid on the capital goods shall be allowed if such capital goods are acquired by a manufacturer on lease, hirepurchase, loan or by any other transaction other than direct purchase, whereby the property in the said capital goods i....
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....ow subrule (1) of rule 57Q. (3) The credit of the specified duty paid on the capital goods shall be allowed to a manufacturer if the capital goods are acquired by the manufacturer on lease, hirepurchase or loan agreement, from a financing company subject to the following procedure, namely :( i) The manufacturer shall file a declaration before the Assistant Commissioner of Central Excise as required under rule 57T; (ii) The manufacturer availing credit of the specified duty paid on capital goods, who has entered into a financial arrangement, ( a) for financing the cost of such capital goods excluding the specified duty, shall produce a copy of the invoice referred to in rule 57T, evidencing payment of specified duty along with a copy of the agreement entered into by him with the said financing company; or (b) for financing the cost of such capital goods including the specified duty, shall produce a certificate from the financing company to the effect that the duty specified on such capital goods has been paid by the said manufacturer to such financing company, prior to payment of first lease rental installment or first hirepurchase installment or first installment of ....
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....as the case may be, from the customs area and also the differential duty recovered from the manufacturer or the importer. (8) No credit of the specified duty paid on the capital goods shall be allowed, if the manufacturer, claims depreciation under section 32 of the Incometax Act, 1961(43 of 1961), or as revenue expenditure under any other provisions of the said Incometax Act, in respect of that part of the value of capital goods which represents the amount of specified duty on such capital goods." 7] The authority of the first instancethe Commissioner passed an order in favour of the Revenue confirming the demand in the show cause notice with penalty and interest. Aggrieved by said order, the RespondentAssessee was in Appeal before the Customs, Excise and Service Tax Appellate Tribunal(CESTAT). The CESTAT by order dated 1st December, 2003 allowed the Appeal filed by the RespondentAssessee taking into account various decisions of the Hon'ble Supreme Court as well as this Court holding that the question which has been posed is no longer res integra, and also with reference to the decision in the case of German Remedies Ltd. V/s. Commissioner of Central Excise, Goa reported....
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....se, hirepurchase, loan or by any other transaction other than direct purchase, whereby the property in the said capital goods is not transferred to such manufacturer. 9] After amendment in 1994, the subrule (3) of Rule 57R read thus: "(3) The credit of the specified duty paid on the capital goods shall be allowed to a manufacturer if the capital goods are acquired by the manufacturer on lease, hirepurchase or loan agreement, from a financing company subject to the following procedure, namely :( i) The manufacturer shall file a declaration before the Assistant Commissioner of Central Excise as required under rule 57T; (ii) The manufacturer availing credit of the specified duty paid on capital goods, who has entered into a financial arrangement, ( a) for financing the cost of such capital goods excluding the specified duty, shall produce a copy of the invoice referred to in rule 57T, evidencing payment of specified duty along with a copy of the agreement entered into by him with the said financing company; or (b) for financing the cost of such capital goods including the specified duty, shall produce a certificate from the financing company to the effect that the du....