Per G.R. Sharma :

M/s. Binani Cement Ltd. have filed the captioned appeal being aggrieved by the impugned order dated 20th June, 2001 passed by the learned Commissioner (Appeals) holding as under :

"In the present case, the capital goods falling under Chapter Heading 84.74 were admittedly received during the period 23.7.96 to 31.8.96 when they were specifically excluded from the ambit of Rule 57Q in terms of Notification No. 14/96-CE (NT) dated 23.7.96. Once they were ineligible from taking of modvat credit on the date of receipt they can not under any circumstances become eligible on the date of taking credit as the question of eligibility arises with reference to the law prevailing at the time of receipt of the goods as mentioned above and can not be postponed to a later date. Hence the aforesaid modvat credit could not have been taken by the appellants and has correctly been denied. No case law has been brought on record to say that amendment made by Notification No. 25/96-CE (NT) dated 31.8.96 was clarificatory in nature. The case laws relied upon by the appellants are also distinguishable. The case of Modi Alkalies Chemicals Ltd. vs. C.C.E. (supra) only holds that credit can not be taken prior to installation but if taken it is actually revenue neutral. Similarly Marvel Vinyls Ltd. vs. C.C.E. (supra) did not interpret Notification No. 25/96-CE (NT) (supra). Even otherwise the said case is distinguishable as in that the question was whether Chapter Heading 85.04 was covered under Rule 57Q even prior to 16.3.95 as it was brought in only w.e.f. 16.3.95. On the other hand in the present case Chapter heading 84.74 was specifically excluded for a short period of time and consequently the later Notification including it can not be said to be clarificatory in nature. Thus, the impugned order has correctly denied the modvat credit.

So far as penalty is concerned, it is clear from the statutory provisions that at the time of receipt of the goods the appellants were specifically debarred from availing of modvat credit under Rule 57Q. That being the position availing of modvat credit by them at a later date by seeking to avail of the provisions of law prevailing at the time of taking of credit was not justified. Hence the penalty has correctly been imposed.

The impugned order is upheld.

Appeal rejected."

2. The facts of the case in brief are that the appellants are engaged in the manufacture of cement. Appellants took Modvat credit of duty under Rule 57Q of Central Excise Rules, 1944 on capital goods classifiable u/s.h. 8474.10 and 8474.90 received during the period 23.7.96 to 31.8.96. During this period the goods in dispute were excluded from the purview of capital goods in terms of Notification No. 14/96-CE (NT) dated 23.7.96. Such goods were covered in terms of Notificaiton No. 25/96-CE (NT) w.e.f. 31.8.96. A Show-cause Notice was issued to the appellant(s) asking them to explain as to why Modvat credit should not be denied and why penalty should not be imposed. In reply to the Show-cause Notice the appellants submitted that they purchased capital goods classifiable u/s.h. 8474.10 during the period 23.7.96 to 31.8.96 for setting up of new cement plant; that they took credit in the month of July 1997 on installation-cum-use in November, 1996 in terms of Notification No. 1/96 dated 1.1.96; that the date of receipt has no relevance as the credit is allowable only on installation/use of the capital goods; that on the date of taking credit in May 1997 and July 1997 the goods were covered under the definition of the capital goods under Rule 57Q; that the Circular No. 167/1/96 dated 3.1.96 issued by the Central Board of Excise Customs clarified that Modvat credit could be taken on the strength of installation certificate; that they had submitted the installation certificate in respect of the disputed capital goods. The Deputy Commissioner of Central Excise adjudicated the case by disallowing Modvat credit amounting to Rs. 32,37,781/-