TaxTMI 
TaxTMI 
2005 (2) TMI 399
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....al Goods Scheme (hereinafter referred to as the "EPCG Scheme") vide Bill of Entry No. B0010228, dated June 27, 1995, claiming exemption of duty under Notification No. 110/95, dated June 5, 1995. The said Capital Goods were installed in their factory on September 29, 1996, as certified by the Assistant Commissioner of Central Excise vide his certificate dated July 9, 1998. 3. However, due to certain circumstances, they could not fulfil the export obligation under the EPCG Scheme. As the Appellants were not able to fulfil the export obligation they paid Rs. 1,14,63,664/- by a TR 6 challan, dated 6-7-1998, 28-4-2000, 24-5-2000, 9-6-2000, 27-7-2000, 30-8-2000, and 29-9-2000 towards the Customs Duties. 4. A Show Cause Notice dated 29-2-2000 was issued by the Assistant Director, Directorate of Revenue Intelligence, Surat, proposing to demand differential duty of Rs. 3,76,27,226/- together with interest. The Appellants were further directed to show cause as to why the goods imported under the EPCG Scheme should not be confiscated under Section 111(o) of the Customs Act, 1962. without alleging fraud, collusion or wilful misstatement with intent to evade duty. 5. The Appellants app....
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....how Cause Notice issued, therefore the duty was not paid on their own and thus they were not entitled to credit in terms of sub-rule (b) of Rule 7(1) of the Cenvat Credit Rules, 2002; (iv) Since the CV Duty was paid by the Appellants on account of short-levy, non-levy, fraud, suppression, misstatement or contravention of the provisions of the Central Excise Act and the Customs Act and the Rules made thereunder, with an intent to evade duty, credit was not available in terms of Rule 7(1) of the Cenvat Credit Rules, 2002; (v) the capital goods have been imported duty free with export obligation and later on not fulfilling it, had contravened the provisions of Sections 111(d) and 111(o) of the Customs Act knowing well that at the time of making an application for the EPCG Licence that the export obligation was to be met and therefore, any subsequent non-fulfilment and subsequent non-payment of duty was deliberate and intentional; (vi) the goods were imported in 1995, and it was not possible at this stage to verify whether all or some of the goods had come into the factory and whether such goods had been used in the manufacture of specified products and that ....
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....ules, 2002 cannot be upheld, as the orders and approach of the Commissioner is patently contrary. (c) It has been held by the Tribunal in the case of Hindustan Motors v. Collector of Central Excise, Jaipur reported in 1994 (73) E.L.T. 597 (Tri. - Cal.) as under : "5. There is no controversy about the receipt of the goods at a time when deemed credit for the inputs in question was admissible. The crucial event determining the admissibility of the credit is the receipt of the inputs and not the act of taking the credit. Merely because the credit was not already taken before such event (deletion of the item, Iron and Steel Scrap from the deemed credit order), it cannot be held that credit was not available. Credit accrues to the manufacturer when the inputs are received and the provision applicable as on the date of such receipt would govern the situation." (underlining supplied) The C.B.E. & C. vide Circular No. 345/2/2000-TRU, dated August 29, 2000 has also clarified by referring to Rule 57AC(2)(c) that - "9. Referring to sub-rule (2)(c) of Rule 57AC, it has been pointed out that there are cases in which the capital goods were received before the 1st....
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....as allowed. Nothing contrary is shown. It has therefore to be held that the submissions of the appellants in this case that they were entitled for the credit of CV Duty under the provisions of Rule 57Q at the time of receipt and installation of the capital goods in their factory and that such credit could not be taken in view of the fact that they had availed an exemption under EPGC Scheme and it was only when they could not fulfil the export obligations and duty was therefore discharged with interest. The consequent payment of CV duty would be entitled to be considered as credit "earned" on the date of receipt of the capital goods, has to be held to be eligible in view of the case laws and the Board's instructions relied upon by the appellant and mentioned hereinabove and nothing contrary to that being shown Rule 9 of the Cenvat Credit Rules, 2001, inter alia, provided that any amount of credit "earned" by a manufacturer under the Central Excise Rules, 1944 shall be allowed as Cenvat Credit under the Cenvat Credit Rules, 2001. Similar provisions have been incorporated in Rule 9 of Cenvat Credit Rules, 2002. Therefore, the credit earned by the Appellants at the time of the rece....
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....of credit on capital goods under Rule 57T and these instructions have been issued by the Board in consultation with the Ministry of Law. The Tribunal in the case of Surya Prabha Mills Limited v. Commissioner of Central Excise, Coimbatore reported in 2002 (149) E.L.T. 929 has held that no restriction in time limit fixed for taking credit in respect of capital goods could be found by them. The reliance of the Commissioner upon the decision of the Hon'ble Tribunal in the case of MRF Ltd. v. CCE, Madras reported in 1996 (88) E.L.T. 222 and Associated Flexible & Wires Pvt. Ltd. v. Commissioner of Central Excise and Customs, Pune reported in 1995 (78) E.L.T. 292 is misplaced since those decisions appear to relate to credit on inputs and not on capital goods, as is the case herein. The decision in the case of Surya Prabha Mills Ltd. v. CCE, Coimbatore (supra) was therefore required to be followed by the Commissioner. The Commissioner's findings in this regard are therefore to be set aside. (h) It is well settled that credit cannot be denied on the ground of non fulfilment of procedural requirement (see Tribunal's decision in J.B.M. Tools Ltd. v. CCE, Pune - 2002 (144)....