Per Archana Wadhwa :

After dispensing with the condition of pre-deposit of duty and penalty amount, we take up the appeal itself for disposal.

2. Demand of duty of Rs. 1,45,45,403.81 has been confirmed against the appellants by denying them the benefit of MODVAT Credit in respect of the various capital goods received by them during the period from March, 1994 to September, 1994, on the ground that the same has been availed and utilised by them before the actual installation of the capital goods in their factory. An equivalent amount of personal penalty has been imposed under the provisions of Rule 57U (6).

3. Shri B.N. Chattopadhyay, learned Consultant for the appellants, submits that the period involved in the present appeal is from March, 1994 to September, 1994 and the capital goods in question were installed in the months of June, July and November, 1994 and January, 1995. He, however, submits that the condition debarring the availment of capital goods before installation, was introduced, vide Notification No. 1/96-CE (NT) dated 1.1.96. As such, during the relevant period, there was no provision in the said MODVAT Rules, denying the benefit of MODVAT Credit to the appellants before installation of the capital goods. He submits that the above factual position has been accepted by the Commissioner, but going by the definition of Capital Goods, Commissioner concludes that the said definition is suggestive of the fact that the capital goods are required to be installed before the Credit is taken out of the same. He places strong reliance on the Tribunal's decision in the case of Pudumji Pulp Paper Mills Vs. Commissioner of Central Excise, Pune reported in 1996 (87) ELT-557, wherein it was held that the assessee could take the Credit even without installation of the capital goods before 1.1.96.

4. Shri V.K. Chaturvedi, learned S.D.R. for the Revenue reiterates the reasoning of the adjudicating authority.

5. After appreciating the submissions from both sides, we fully agree with the learned Consultant. The amendment in the MODVAT provisions was carried out with effect from 1.1.96, restraining the assessees to take the MODVAT Credit in respect of capital goods before their installation. No such condition can be read into the MODVAT Rules prior to the said date. As such, we hold that inasmuch as there was no embargo for taking Credit before installation during the relevant period, the appellants cannot be blamed for taking Credit and utilising the same before the actual installation of the capital goods.

6. The reliance by the adjudicating authority upon the definition of capital goods, is not appropriate inasmuch as the same cannot be read as a pre-condition of taking of Credit. Accordingly, following the ratio of the earlier decision of the Tribunal referred supra, we set aside the impugned Order and allow the appeal with consequential reliefs to the appellants. Stay Petition also gets disposed of.