ORDER
P.G. Chacko, Member (J)
1. Modvat Credits totalling to Rs. 5,20,611/- were denied to the appellants in respect of a large number of capital goods which were installed in their factory during the period 23.7.96 to 31.8.96. The credits were taken in 3/98. As, in the relevant show-cause notice, time-bar was not raised as a ground for denying credit, no limitation issue is involved in this case. The short question to be settled is whether the amendment brought to Clause (i) of Explanation to Sub-rule (1) of Rule 57Q of the CE Rules, 1944, by Notification No. 25/96-CE(NT) dated 31.8.96 had retrospective effect. If the amendment is held to be clarificatory and retrospective, the benefit of Modvat Credit on some of the capital goods can be claimed by the assessee for the above period on account of the fact that those goods are falling under heading 84.74 of the CETA Schedule, winch is a tariff entry added to the category of ‘Modvatable’ capital goods by the said amending Notification. If the amendment is held to be prospective only, the position will be that heading 84.74 would stand excluded from the category of ‘Modvatable’ capital goods in terms of Clause (i) of the Explanation ibid as it stood prior to the amendment and consequently the benefit of capital goods credit will not be available to the above goods falling under heading 84.74 for the aforesaid period.
2. The learned Consultant for the appellants submits that Notification 25/96-CE (NT) was clarificatory and hence retrospective. In this connection, he relies on the Tribunal’s judgment in the case of CCE, Patna v. Bihar Caustic & Chemicals Ltd. . To be precise, the learned Consultant’s reliance is on para 4 & 5 of the Tribunal’s order, which are extracted below:
Shri Bagaria also argued that in any case these tubes and pipes etc. were covered by the definition of capital goods as per Notification No. 25/96-CE (NT) dated 31.8.96 which has been held to be clarificatory in nature. For his above submission he relied upon the following decisions :
(i) – JK synthetics Ltd. v. CCE
(ii) – Marvel Vinyls Ltd. v. CCE
(iii) – Valley Abrasives Ltd. v. CCE
(iv) – Associated Cement Co. Ltd. v. CCE
5. We agree with the contentions raised by the ld. Advocate for the respondents and hold that the tubes, pipes and fittings used for conveying of liquids were covered by the definition of capital goods under Rule 57Q even prior to its amendment and were entitled to Modvat Credit. As such no merit is being found in the Revenue’s appeal in respect of these items.
The learned Consultant has also brought on record a copy of the Tribunal’s decision in the case of JK Synthetics Ltd. v. CCE which is one of the decisions referred to in the above order of the Tribunal relied on by the Consultant.
3. The learned JDR, on the other hand, submits that as Notification 25/96-CE(NT) dated 31.8.96 did not expressly provide for retrospective operation, it cannot be held to have retrospective effect. He submits that neither in the above order of the Tribunal nor in any of the decisions referred to therein is there anything to indicate that Notification 25/96/CE(NT) was held to be clarificatory and retrospective.
4. After examining the records and submissions carefully, I find that, as rightly pointed out by the learned JDR, there was nothing in Notification 25/96-CE (NT) to indicate that the amendments proposed therein were meant to be retroactive. One of the results of the amendment was that heading 84.74 occurring in the exclusionary part of Clause (i) of Explanation to Rule 57Q(1) got deleted. The legislative intent was very clear and the same was to take out heading 84.74 from the excluded category of capital goods and include it in the category of capital goods specified for Modvat Credit. The amendment is so definitive that it can hardly be said that it was intended to be “clarificatory”. The appellants do not say as to what was clarified by the amending Notification. Their reliance on Bihar Caustic & Chemicals (supra) does not take them anywhere inasmuch as the Tribunal’s order in that case did not expressly take the view that Notification 25/96-CE (NT) was clarificatory in nature. Any basis for considering Notification 25/96-CE (NT) as clarificatory is not discernible from the Tribunal’s order. In the circumstances, in my view, the appellants cannot claim any firm support from the cited decision. As regards the remaining capital goods which are admittedly falling under heading 73.25, the appellants do not seem to have a case that this tariff entry was specified under Rule 57Q for Modvat benefit during the period of dispute.
5. In the result, none of the capital goods in question can be held, to be eligible for Modvat Credit under Rule 57Q for the period of dispute. Appeal is dismissed.
(Dictated and pronounced in open Court)