ORDER
S.S. Kang, Vice-President
1. Heard both sides.
2. The appellant filed this appeal against order-in-appeal passed by the Commissioner (Appeals). In this case the appellant availed the benefit of Modvat credit in respect of capital goods in the month of April 2000. A show cause notice was issued to the appellant on the ground that as per the provisions of Rule 57AB of Cenvat Credit Rules the manufacturer can take credit only in respect of 50% duty paid on capital goods in a financial year and in the subsequent financial year the assessee can take credit on remaining amount of 50% of duty.
3. The contention of the appellant is that the credit taken on April 2000 in respect of the capital goods which were received in the month of March 2000 and they had taken credit in view of the provisions of Rule 57AG of Cenvat Credit Rules.
4. The contention of the appellant is that subsequently Revenue issued Board Circular dated 29-8-2000 whereby it has been clarified that in case the capital goods were received before 1st April 2000 also installed before that date and credit has not been taken for some reasons prior to 1-4-2000. In such situation the board clarified that the manufacturer is entitled to take Cenvat credit of the amount under Rule 57AG (1) of Cenvat Credit Rules. In this situation, the contention is that the appellant have taken credit under Rule 57AG of Cenvat Credit Rules. In view of the Board Circular, they are entitled for the credit. The contention of the Revenue is that the board circular is not applicable on the fact of the present case, as on 1st April 2000 the capital goods on which the appellant availed the credit were not installed, therefore, the impugned order is rightly passed.
5. The appellant in this case taken credit in 100% EOU in the month of April 2000 the capital goods were received in the factory in March 2000. The appellant were relying on the Board’s Circular dated 29-8-2000 in support of their claim. I find that as per the Board’s Circular the credit was allowed in respect of the capital goods which were received before 1-4-2000 and also installed before that date and credit has not been taken in the present case as the capital goods were not installed in April 2000 and this fact is admitted by the appellant, therefore, the Board Circular is not applicable.
6. I find that as per the provisions of Rule 57AC of Cenvat Credit Rules, which are applicable during the period in dispute the Cenvat Credit Rules in respect of capital goods received in a factory, shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year. The balance of Cenvat credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, provided that the capital goods are still in the possession and use of the manufacturer of final products in such subsequent years. The appellant relied upon the various decisions of the Tribunal to submit that the goods in question are spares of the capital goods, therefore, are not covered under these provisions, as these provisions are relatable to the machines. I find no force in he arguments of the appellant as the appellants were taking credit on these spares under the provisions of capital goods. These are capital goods it does not make it difference that it is machine or a part because there is no provisions of Cenvat Credit Rules regarding taking of credit on spares. The appellant relied upon the decision of the Tribunal in the case of Grasim Industries v. CCE . I find that this case relates to the capital goods imported under EPCG scheme. In this case in the year when the duty was paid on debonding of the capital goods, the credit was not taken but in the subsequent year 100% credit was taken whereas in the present case the credit was taken on receipt of the capital goods in the same financial year, therefore, the ratio of the above decision is not applicable in the facts of the present case. Keeping in view the facts and circumstances of the case, the appellants are entitled for 50% of the credit in the financial year when the capital goods were received. I find no infirmity in the impugned order and the appeal is dismissed. However, appellant shall have liberty to take credit on remaining amount of 50% in accordance with law.
(Dictated & pronounced in open Court on 10-6-2005)