TaxTMI 
TaxTMI 
2004 (4) TMI 165
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....ps/Methanol and avail of the facility of Cenvat credit; that they imported certain capital goods under Project Import during the period from November, 1995 to May, 1996; that in terms of erstwhile sub-rule (7) of Rule 57Q of the Central Excise Rules, 1944 the Credit cannot be taken by them as the capital goods cannot be installed due to factors beyond their control; that the Modvat Credit Scheme was replaced by the Cenvat Credit Scheme w.e.f. 1-4-2000; that in view of new Rule 57AC(2)(c) of the Central Excise Rules, 1944 they had taken Cenvat credit in 2000 to the extent of 50% of the Additional Customs duty paid by them on the capital goods imported by them; that further in April, 2001 they had taken the remaining 50% Credit of the duty; t....
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....o been placed on the decision in the case of Ballarpur Industries Ltd. v. CCE & C, Nagpur, 2003 (156) E.L.T. 423 (T) wherein it has been held that installation is not a pre-requisite for taking credit relying upon the Board's letter dated 3-4-2000. Finally the learned Advocate contended that the word 'Use' mentioned in sub-rule 2(b) of Rule 57AC for taking the remaining 50% of the Modvat credit in subsequent financial year will mean intended use and not actual use. Reliance has been placed on the decision in the case of State of Haryana v. Dalmia Dadri Cement Ltd., 1988 (14) ECR 292 (S.C.) and SAIL v. C.C.E., 1996 (88) E.L.T. 314 (S.C.). 3. Countering the arguments Shri Kumar Santosh, learned SDR, submitted that as per Rule 57AA of the C....
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....e final products in such subsequent years."; that as the capital goods have not been installed they were not in use and the Appellants are not eligible to take 50% Credit in the financial year 2001-02. 4. 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 capital goods. As per this definition, capital goods means various goods specified under Rule 57AA(a) used in the factory of manufacturer of the final products. Rule 57AB specified the duties, in respect of which Cenvat credit can be taken by a manufacturer. Rule 57AC prescribe the conditions for allowing Cenv....
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....ufacturer or a person designated by him for this purpose. As such a specific provision prohibiting the taking of Cenvat credit in respect of capital goods does not find place in Rule 57AC of the Central Excise Rules. The learned Counsel has also drawn our attention to Board's Circular F. No. B-4/7/2000-TRU, dated 3-4-2000 wherein the Board has clarified certain aspects which had been raised by the Commissioners as also by the Trade and Industry in respect of Cenvat Rules which came into force from 1-4-2000. Para 8 of the clarification clearly mentions that "in the case of capital goods, the Cenvat Rules do not provide installation of capital goods as a pre-requisite for taking Cenvat credit. The credit can be taken as and when the capital g....
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....hem can be taken as credit." The Appellate Tribunal had also considered the contention of the Revenue about the expression "used" mentioned in the definition of capital goods in Rule 57AA of the Rules. The Tribunal has held as under :- "It is to be noted that the definition of "inputs" contained in Rule 57A also refers to them as "used in relation to the manufacture of final products". Applying the Commissioner's reasoning, therefore, it would follow that credit of duty paid both on capital goods as well as on inputs can only be taken when they were actually put to use. This position in respect of inputs is not only contrary to standing practice with regard to the capital goods, it is directly the contradictory view expressed by the Boar....