ISPAT INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THE appellant is engaged in the manufacture of sponge iron and HR coil classifiable under Chapter 12 of Central Excise Tariff Act, 1985 and were availing the benefit of modvat credit of duty paid on the capital goods received in their factory. As per facts on records, the appellants received capital goods for the Hot Strip Mill (HSM) - Phase II project during the year 2001 -2002. In terms of provisions of Rule 4(2) of the Cenvat Credit Rules 2001 -2002, they availed 50% of the duty paid on the said capital goods as credit. There is no dispute about the availment of said modvat credit. Balance 50% of the credit was availed by them in the subsequent Financial Year i.e. on 11/04/2002. The dispute relates to the said availment of credit. As per the revenue, the appellant was not entitled to avail the said credit of 50% in the year 2002 -2003 inasmuch as the capital goods were still at the stage of erection and had not been actually put to use.

(2.) ON the basis of the above facts, they were issued with show cause notices on 06/05/2003 and on 01/09/2003 proposing denial of the balance 50% of the credit availed by them in the subsequent financial year of the receipt of the capital goods on the ground that they are not being actually used in the manufacture of the final products. Noticec contended before the adjudicating authority that in terms of the relevant rules, actual use of capital goods is not the criteria for availing the modvat credit and it is sufficient as long as the capital goods are in the possession and use of the assessee. The expression "use of" appearing in Rule 4(2) of the relevant Cenvat Credit was sought to be interpreted by the appellants as "intention to use the said capital goods" or "being available for use". The reliance was placed upon the various decision of the Hon'ble Supreme Court as also of the Tribunal. The demand was also assailed on limitation having been issued beyond the normal period.

(3.) HOWEVER , the Commissioner did not accept the above contention of the appellant and vide his impugned order denied the Modvat Credit and also imposed personal penalty of identical amount upon the appellants. He also ordered for payment of interest at the appropriate rate. Hence the present appeal.