ORDER
G.R. Sharma, Member (T)
1. 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-C.E. (N.T.), 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-C.E. (N.T.), 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. v. 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. v. C.C.E. (supra) did not interpret Notification No. 25/96-C.E. (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-C.E. (N.T.), dated 23-7-96. Such goods were covered in terms of Notification No. 25/96-C.E. (N.T.) 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/- and imposing a penalty of Rs. 55,000/-. Against this order the appellants filed an appeal before the Commissioner (Appeals) who held as indicated above.
3. Arguing the case for the appellant(s) Shri Sudhir Gupta, learned Counsel submits that after issue of Notification No. 14/96-C.E. (N.T.), dated 23-7-96 goods classifiable under Chapter Heading 84.74 were excluded. He submits that this was an error on the part of the Government and when representation was made the position available before 23-7-96 was restored by Notification No. 25/96 by including the goods classifiable under Chapter Heading 84.47. He submits that this clearly shows that Notification No. 25/96 was clarificatory in nature. Learned Counsel submits that before 23-7-96 the disputed goods were eligible to Modvat credit as also after 31-8-96 and this was the short period between 23rd July, 1996 and 31st August, 1996 when the goods by mistake got omitted from eligibility to Modvat credit. He submits, therefore, that the eligibility should be taken in continuity otherwise it will lead to discrimination which is not permitted by the Constitution of India.
4. Learned Counsel submits that Modvat credit u/r 57Q became eligible to the appellants on the date of installation of the goods and not on the date of receipt of the goods in the factory. He submits that installation/use of the goods in the factory was in the month of November, 1996 whereas the goods in dispute had become eligible to Modvat credit w.e.f. 31st August, 1996. Since eligibility of the date is criterion for taking Modvat credit the appellants had correctly taken Modvat credit on May to July, 1997. In support of his contention the learned Counsel referred to the judgment of the Tribunal in the case of Pudumjee Pulp & Paper Mills Ltd. v. C.C.E., Pune reported in 1996 (87) E.L.T. 557. He submits that in paras 4 and 4A the position was clarified by the Tribunal. The learned Counsel also referred to the judgment of this Tribunal in the case of J.K. Synthetics Ltd. v. C.C.E., Jaipur reported in 1996 (88) E.L.T. 785 in which the Tribunal held, “The Modvat Scheme which provides for duty credit on inputs and capital goods has been liberalised considerably over the past few years. Still there are problems about the coverage of certain inputs and capital goods. I propose to clarify the scope of eligible capital goods by specifying the heading and sub-headings of the tariff relating to capital goods in the Modvat Rules. Being thus, a clarificatory amendment to Rule 57Q, the substituted Explanation, in our view, can be retrospectively applied as per well-settled principles of interpretation of notifications.”
5. Learned Counsel also referred to the judgment of this Tribunal in the case of Modi Alkalies & Chemicals v. C.C.E., Jaipur reported in 2000 (121) E.L.T. 792 in which the Tribunal held, ” In the instant case, we find that the admitted position is that the goods were installed in the factory even if credit was taken before the installation of the goods in the factory is ordered to be reversed, the moment, the goods get installed; the applicant can take again credit and thus the entire exercise of reversing credit and taking credit is revenue neutral to the applicants.”
6. Learned Counsel summing up his arguments submits that since the date of eligibility of the credit on the capital goods is the date of installation and that in the instant case, on the date of installation the goods became eligible for Modvat credit on capital goods, therefore, the denial of Modvat credit is not warranted. He, therefore, prayed that the appeal may be allowed.
7. Shri Mewa Singh, learned SDR reiterates the findings of the Authorities below. He submits that the learned Commissioner (Appeals) has distinguished the various decisions of the Tribunal cited by the appellants and had given well-reasoned conclusion. He, therefore, prays that the appeal may be rejected.
8. We have heard the rival submissions. We have also perused the case-law as also the various Notifications cited and relied upon by the appellants. We note in the instant case that the admitted facts are that the capital goods were received in the factory between 23-7-96 and 31-8-96. Capital goods were installed/used in the plant in November, 1996 and Modvat credit of the duty paid on these capital goods was taken between May, 1997 and July, 1997.
9. On 23-7-96 in terms of Notification No. 14/96 capital goods falling under Chapter Heading 84.74 were notified to be excluded for the purpose of Modvat credit under Rule 57Q. The Govt. of India by issue of Notification No. 25/96, dated 31-8-96 restored Modvat credit on goods classifiable under Chapter Heading 84.47.
10. The dispute, therefore, is confined to the short period between 23-7-96 and 31-8-96. During this period Modvat credit on capital goods classifiable under Chapter Heading 84.47 was not eligible.
11. In the instant case, the goods were received during the period 23-7-96 to 31-8-96. They were installed in November, 1996. A dispute, therefore, arose as to whether Modvat credit will be admissible on the goods received between 23-7-96 and 31-8-96. The contention of the assessee was that the appellants had become eligible to take Modvat credit on the goods classifiable under Chapter Heading 84.47 w.e.f. 31-8-96 since the date of installation of the goods was after 31-8-96, therefore, Modvat credit was admissible to them. However, the Revenue was of the view that it is the date of receipt of the goods in the factory and that the date of installation is only a deferred date. The contention of the Revenue is that Modvat credit must accrue on the goods on the date of receipt in the factory and not on the date of installation. We agree with this contention of the Revenue inasmuch as that two issues are involved. The first issue is what is the date on which Modvat credit becomes available to the goods. The second issue is whether date of installation can be considered as the date on which the goods should be eligible to Modvat credit. We note that vested right of taking Modvat credit must arise on the date of receipt of the goods. The date of the installation of the goods is only a deferred date of taking credit for administrative reasons. Thus the date eligible will be the date of receipt. In the instant case the date of receipt of the goods is between 23rd July, 1996 to 31st August, 1996 and therefore, between this period we have to examine whether the goods were eligible to Modvat credit or not. The answer is ‘no’ as they were excluded for the purpose of Modvat credit during this period.
12. We have perused the case-laws cited. We note in those cases that the facts are entirely different. In the case of Pudumjee Pulp & Paper Mills Ltd., the issue before the Tribunal was taking of credit and utilisation of credit and not the date of eligibility of credit. In the instant case the issue is whether the date of eligibility of Modvat credit was between 23-7-96 and 31-8-96 or in November, 1996 and thus the facts in the two cases are different. In the case of J.K. Synthetics Ltd. the Tribunal had come to the conclusion that the Notification No. 14/96 was clarificatory in nature. However, in the instant case we do not see anything in the Notification to hold that the Notification is clarificatory; on the contrary, there are decisions on the subject that no notification can be treated as clarificatory for purpose of retrospective application unless it is specifically provided in the notification and thus the case of J.K. Synthetics Ltd. is distinguishable. So also is the position in the case of Marvel Vinyls Ltd. reported in 1997 (90) E.L.T. 361. In so far as the decision of the Tribunal in the case of Modi Alkalies & Chemicals Ltd. is concerned we note that that decision was about revenue neutrality and therefore, has no application to the facts of the present case.
13. Having regard to the above findings we reject the appeal.