TaxTMI 
TaxTMI 
TaxTMI 
2005 (12) TMI 112
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....uty paid on capital goods received in factory as per Rule 57-Q of Central Excise Rules, 1944. However, declaration required to be filed under Section 57-T(l) was filed after 3 months of the receipt of the capital goods in factory and availing MODVAT credit of duty. It is stated that the goods were received in factory on 31st March, 2000 vide invoice dated 16-3-2000. However, declarations were made on 12th of July, 2000 by which period of filing declaration had expired. The period within which declaration are to be filed is provided under Rule 57T(1) to 57T(3), which is part of one scheme. Rule 57-T(l) envisages that every manufacturer intending to take credit of the duty paid on the capital goods under Rule 57-Q shall, before receipt of the capital goods, file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating therein the particulars of the capital goods, description of the final products manufactured in his factory and such further information as the Assistant Commissioner may require, and shall obtain a dated acknowledgement of the said declaration. sub-rule (3), though, numbered independently indicates that it is oper....
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.... this sub-rule rigors character of procedural requirement of filing of declaration within time or filing declaration with full particulars have been softened and it is indicated as a matter of legislative policy that for merely procedural lapses the benefit of MODVAT credit, to which manufacturer is otherwise entitled on substantive premise, is not to be denied. In view thereof it was submitted before the Tribunal by the assessee that since with the invoice submitted by the assessee full requisite particulars were furnished, and there is no dispute that Duty Paid capital goods were in fact received in the factory and, used in manufacture of goods, substantive requirement of availing benefit of MODVAT credit on capital goods used in manufacturing of end product as per Section 57-Q have been fulfilled, therefore, the Tribunal has rightly allowed the appeal of the assessee to retain the benefit of MODVAT credit availed by it on receipt of such duty paid capital goods in factory, notwithstanding that declarations were filed belatedly. It was pointed out that limitation for filing declaration is part of procedural law and not substantive content of requirements. 6. Learned counsel for ....
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....t Commissioner may require, and shall obtain a dated acknowledgement of the said declaration. (2) The manufacturer shall also file a declaration in accordance with the provisions of sub-rule (1) of Rule 57R to the Assistant Commissioner of Central Excise having jurisdiction over his factory to the effect that such capital goods shall not be used exclusively for production of final product which is exempt from the whole of the duty of excise leviable thereon (other than a final product which is exempt from whole of the excise of excise leviable 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 and also that he shall not claim depreciation under Section 32 of the Income Tax Act, 1961 (43 of 1961), or as revenue expenditure under any other provision of the said Income-Tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty paid on such capital goods. (3) In case where a manufacturer was not in a position to make the declaration under sub-rules (1) and (2) makes the declaration subsequently but ordinarily within a period ....
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.... invoice evidencing that Duty has been paid on such goods. Proof of payment of Duty on the goods received in factory, whether as inputs envisaged under Rule 57G or Capital Good under Rule 57Q/57R is a substantive provision inasmuch as it is condition precedent that MODVAT credit is availed only in respect of such goods which have suffered Duty and that Duty has been paid thereon. 13. Rule 57-T too makes it imperative on manufacturer intending to get MODVAT credit on capital goods received in factory that capital goods must be received under the cover of documents enumerated in sub rule (3) of Rule 57-G. This again is another procedural requirement for evidencing payment of excise duty on the capital goods in respect of which modvat credit is availed by the assessee. 14. If we read in that light sub rule (13) of Rule 57T, it leaves no room of doubt that the procedural requirement considered hitherto before as mandatory condition for availing benefit of MODVAT, has been relegated to subsidiary position and had been made subservient to fulfilment of substantive requirement for availing MODVAT credit. 15. The substantive requirement of availing MODVAT credit of Duty Paid on the inpu....
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....e assessee has filed a declaration as contemplated in the Modvat rules, the Assistant Commissioner having jurisdiction over the factory would allow the credit of duty so paid after making enquiries as above. 3. It should hereinafter be ensured that Show Cause Notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries. Wherever the Assistant Commissioner, after making enquiry due, is satisfied that the Modvat credit taken by the assessee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed towards reduction of litigation. Significantly in para Nos. (2) and (3) of the circular, the Board of Excise & Customs clearly indicated that Show Cause Notice to withdraw Modvat credit by the manufacturer on inputs and capital goods used in manufacturing of end product ought not to be issued for procedural lapses without making proper enquiries with regard to duty paid, nature of goods at the suppliers and, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whether the goods have been used or are intended to be us....