GRASIM INDUSTRIES LTD. Vs. CCE

JUDGEMENT

(1.) This appeal filed by M/s Grasim Industries Ltd (herein after referred to as the appellants) is directed against the order in Appeal No. 57/03 SCN (TRY -II) dated 25.02.2003 passed by the Commissioner of Central Excise (Appeals), Trichy whereby the Commissioner has rejected the appeal of the appellants and upheld the order passed by the original authority wherein the original authority has disallowed the credit of Rs. 2,39,96,904/ - being the excess credit availed by the appellants on capital goods, besides imposition of penalty of Rs.2000/ - under Rule 173Q of the CE Rules, 1944. He had also ordered for recovery of interest in terms of Section 11AA of the CE Act, 1944.

(2.) The brief facts of he case are that the appellants are engaged in the manufacture of cement and clinker falling under chapter 25 of the schedule to the CETA 1985. They are availing Modvat Credit of duty paid on the inputs as well as capital goods under Rule 57A and 57Q of the CE Rules. The appellants after filing necessary declaration for Modvat credit of duty paid on capital goods, imported certain capital goods under Project Import Regulations falling under heading No. 98.01 of the Customs Tariff Act, 1975. Though these items were received in the factory before 29.2.2000, they were installed in the factory only on 6.3.2000. The appellants availed Modvat Credit on 31.3.2000 and 1.4.2000, that is after the installation of the capital goods. Rule 57Q as it existed between 1.3.97 and 29.2.2000 permitted Modvat credit to the extent of 75% of the countervailing duty on the capital goods imported under Project Import Regulation. This restriction was however removed vide Notification No. 11/2000 CE (NT) dated 1.3.2000. Since installation of the capital goods was completed only on 6.3.2000 the appellants availed 100% credit of countervailing duty pursuant to the amendment. The original authority disallowed the credit in excess of 75% to the extent of Rs 2,39,96,904/ - on the ground that the goods were received into the factory prior to 29.2.2000 as at that time the credit available was only to the extent of 75%. He has also ordered recovery of interest apart from imposing penalty as noted above. The appellants filed appeal before the Commissioner (Appeals) who rejected the appeal and hence the present appeal.

(3.) Shri N. Venkataraman, learned Counsel for the appellants referred to the written submissions made by appellants wherein it is inter alia stated as under: