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2006 Supreme(P&H) 4259
PUNJAB & HARYANA HIGH COURT
Adarsh Kumar Goel and Rajesh Bindal JJ.
Commissioner Of C. Ex., Delhi-iii
Versus
A.B.Card Clothing (Pvt.) Ltd.
C.E.A. No. 8 of 2004,
Decided On : NOVEMBER 6, 2006
The binding nature of circulars in respect of admissibility of Modvat credit and the applicability of amended rules in pending cases.
Headnote:
Modvat Credit - Central Excise - Central Excise Act, 1944, Section 35H(1) - Rule 57Q, Rule 57T, Notification No. 7/99-C.E. (NT.) - The court discussed the interpretation and application of Rule 57T of the Central Excise Rules, 1944, the amended rule as per Notification No. 7/99-C.E. (NT.), and the binding nature of circulars in respect of admissibility of Modvat credit. The court found that the assessee was entitled to Modvat credit based on the amended rule and circulars, and no substantial question of law arose for consideration.
Fact of the Case:
The assessee filed a declaration for availing Modvat credit on capital goods received in the factory, but the Original Authority denied the credit due to delay in filing the declaration. The Commissioner (Appeals) upheld the claim of the assessee, and the Tribunal dismissed the appeal of the revenue based on earlier decisions.
Finding of the Court:
The court found that the assessee was entitled to Modvat credit based on the amended rule and circulars, and no substantial question of law arose for consideration.
Issues: The issues revolved around the timing of filing the declaration for availing Modvat credit and the applicability of the amended rule and circulars in pending cases.
Ratio Decidendi: The court held that the assessee was entitled to Modvat credit based on the amended rule and circulars, and no substantial question of law arose for consideration.
Final Decision: The appeal was dismissed.
1. This appeal has been preferred under Section 35H(1) of the Central Excise Act, 1944 (for short, #28;the Act#29;) by revenue against the order dated 16-9-2003 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi proposing following substantial questions of law:-
#28;(i Whether the Hon#25;ble Tribunal is correct in allowing Modvat credit in terms of Rule 57Q in respect of the capital goods where the statutory declaration, required under Rule 57T of the Central Excise Rules, 1944, was not filed by the party within the prescribed/extended time period? or (ii Whether Hon#25;ble Tribunal was correct in computing the time limit, for filing of statutory declaration from the date of registration when the law specifically stipulated the same to be from the date of receipt of capital goods in the factory?#29;
2. The assessee is engaged in the manufacture of card-clothing and got itself registered with the Central Excise Department vide Registration Certificate No. 04/R-III/GGN/98 dated 14-1-1998. It filed a declaration on 23-1- 1998 in terms of Rule 57T of the Central Excise Rules, 1944 (for short, #28;the Rules#29;) for availing Modvat credit on capital goods received in the factory on 19-9-1996 under Bill of Entry No. 7733 dated 21-8-1996. The Original Authority denied Modvat credit on the ground that irrespective of the fact that factory had not come into existence, the assessee was required to file declaration of goods being received in the factory. Since the declaration had not been filed for more than one year after the receipt of goods in the factory, delay beyond three months of receipt of goods could not be condoned as per Rule 57T aforesaid.
3. On appeal, the Commissioner (Appeals) upheld the claim of the assessee on the ground that #24;factory#25; was a place where production was carried out and since the factory itself was registered on 14-1-1998, time for filing declaration commenced from the said date.
4. The Tribunal dismissed the appeal of the revenue following its earlier decisions in CCE, Coimbatore v. Vaithilingam Spinning Mills (P) Ltd ., 2002 (149) E.L.T. 610 (T) = 2002 (51) RLT 461 (CEGAT-Che) and CCE, Chennai v Sivagurunathan Synthetics (P) Ltd., 1998 (104) E.L.T. 657 (T).
5. We have heard learned Counsel for the parties.
6. Learned Counsel for the revenue submitted that Rule 57T of the Rules has to be strictly construed and declaration having not been filed in terms of the said Rule, when the goods were received in the factory or within three months thereof, assessee was not entitled to Modvat credit.
7. Learned Counsel for the assessee submitted that apart from the reasoning contained in the order of the appellate authority namely that factory itself was registered on 14-1-1998 and declaration was filed immediately thereafter, the rule itself was amended on 9-2-1999 and as per circular of the department No. 441/7/99-CX dated 23-2-1999, the amended rule is to apply to pending cases, which include proceedings pending in appeal and thus, present case is to be governed by the amended rule. He submits that this is the view taken by the Tribunal in Kamakhya Steels (P) Ltd . v. Commissioner of Central Excise, Meerut, 2000 (121) E.L.T. 247 (Tribunal-LB) which decision has been followed in Vaithilingam Spinning Mill#25;s case (supra).
8. Since the amendment and circulars are referred in the order of the Tribunal in the case of Kamakhya Steels case (supra), we reproduce paras 6 and 7 of the said order which are as follows :-
#28;6. Shri A.R. Madhav Rao, ld. Advocate as an intervener submitted that the question referred to the Larger Bench in the instant case need not be answered and matter be remanded to the Adjudicating Authority to examine the issue afresh in the light of amendment to Rules 57G and 57T as per Notification No. 7/99-C.E. (NT.), dated 9-2-1999, and the two Circulars (M.F.D.R. letter F. No. 267/6/92-CX dated 30-1-1992 and Circular No. 441/7/99-CX., dated 23-2-1999). He ref
