TaxTMI 
TaxTMI 
TaxTMI 
2004 (3) TMI 155
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....instance of the Department, they had to pay Rs. 1 crore on 6-10-2000 which was done by reversing the credit of Rs. 83,10,435/- and by paying the balance through P.L.A.; that they took the credit of Rs. 83,10,435/- again on 3-10-2001 to avoid any limitation being pleaded by the Department subsequently. 2.2 He mentioned that a show cause notice dated 23-9-2002 was issued to the Appellant Company for reversing the credit of Rs. 83,10,435/- on the ground that the capital goods are lying in CKD/unassembled conditions and are not being used in the factory of production; that another show cause notice dated 9-10-2002 was issued to both the Appellants for reversing the credit of Rs. 83,10,435/- taken on 1-4-2001 in respect of second 50% balance; that the third show cause notice dated 9-10-2002 was issued for reversing the credit of Rs. 79,92,178/- as the goods were not in use. 2.3 He also mentioned that the Commissioner, under the impugned order, has confirmed the demand of duty made in all the three show cause notices, besides imposing a penalty of equivalent amount under Section 11AC of the Central Excise Act read with Rule 57AH(2) of the Central Excise Rule and a penalty of Rs. 1 lakh....
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....he Appellants have reversed the credit and cannot utilise the same, no penalty is imposable on them. He also emphasised that they had filed the R.T. 12 Return on 15-10-2001 in which it was shown that credit of second 50% had been taken whereas the show cause notice was issued only on 9-10-2002 and the fact of non-utilization of the credit clearly reveals that there was no intention to evade payment of duty. 3.3 Regarding third show cause notice, relating to D.G. set and some other items imported by them, the learned Senior Advocate mentioned that the Appellants had correctly taken the Cenvat Credit of first 50% in October/December, 2000 and July, 2001 as there is no condition of capital goods being installed; that the word 'used' in the definition of capital goods, has been put for defining the eligibility of certain items and if they are intended for use in the factory, only in such circumstances the credit would be admissible; that Rule 57AC(2) governs the situation and the manner in which the credit is to be taken; that as per this sub-rule, Cenvat Credit can be taken in respect of capital good upto 50% of the duty, received in a factory and not been installed before 1-4-2000. ....
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....their factory and accordingly do not qualify to become capital goods at the relevant time; that the Appellants were not eligible to take Cenvat Credit. He, further, submitted that Rule 57AC(2) provided that 50% (balance credit) may be taken in the subsequent financial year provided that the capital goods "are still in possession and use of the manufacturer of the final products in such subsequent years."; that when the Appellants availed balance 50% credit, the capital goods were not in use as the same were lying in CKD/unassembled condition; that accordingly, they were not eligible for the credit of remaining 50% of the credit. The learned S.D.R. also contended that the provisions of sub-rule 2(b) of Rule 57AC makes it apparent that the capital goods should be in use from the initial date when first 50% credit is taken by a manufacturer. He also mentioned that once the Cenvat Credit has been reversed by them, they cannot take the credit on their own. 5. We have considered the submissions of both the sides. We observe that w.e.f. 1-4-2000, new Central Excise Rules came into effect relating to credit of duty paid on excisable goods used as inputs or capital goods. Rule 57AA defined....
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....apital goods, the Cenvat Rules do not provide installation of capital goods as a pre­requisite for taking Cenvat Credit. The credit can be taken as and when the capital goods are received in the factory". In view of this specific clarification given by the Board, it is not open to the Revenue to argue contrary to the clarification contained in the said Circular. Refer Ranadey Micro Nutrients v. C.C.E., 1996 (87) E.L.T. 19 (S.C.). Accordingly, first 50% of Cenvat Credit, taken by the appellants in respect of capital goods before their installation or use, cannot be denied to the appellants. To this extent, the appeals filed by the appellants, are allowed. 6. Sub-rule 2(c) of Rule 57AC provided for taking Cenvat Credit in respect of capital goods which had been received in the factory but had not been installed before 1-4-2000. As per the provisions of this sub-rule, the appellants are eligible to avail of 50% of the Cenvat Credit during the financial year 2000-2001. Again in respect of such Cenvat Credit also, the condition of installation of capital goods does not apply for taking the Cenvat Credit of first 50% of the duty. This is also apparent from the Board's clarification ....