COMMISSIONER OF CENTRAL EXCISE Vs. USHA MARTIN LTD.

JUDGEMENT

(1.) HEARD Shri T.K. Kar, Ld. SDR for the Revenue -Appellant and Shri S.K. Bagaria, Ld. Sr. Advocate alongwith Shri Partha Banerjee, Ld. Advocate for the respondents.

(2.) SHRI Kar submits that the impugned order dated 10.9.2003 is not proper and legal in view of the fact that the capital goods on which modvat credit has been taken, did not fulfil the provisions of Rule 57AA of Central Excise Rules, 1944. He submits that it is clear from the Rule that no modvat/Cenvat credit is allowable on the capital goods installed outside the factory premises in terms of provisions of Rule 57AA of CER. He, further, submits that the Commissioner (Appeals) has not appreciated the fact that the definition of inputs and the capital goods stress the word "used within the factory of manufacture of final product". He also relies on the Larger Bench decision in the case of Vikas Industrial Gases v. CCE, Allahabad, 2000 (118) ELT 257 wherein the Tribunal has held that the assessee are not entitled to credit against items installed outside the factory premises. He submits that the Commissioner (Appeals) has incorrectly placed reliance on the Hon'ble Supreme Court's decision in the case of Jaypee Rewa Cement v. CCE, as prima facie, this decision relates to credit on inputs, whereas the instant case is in respect of credit on capital goods. He relies on the decision rendered by the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Jaipur v. J.K. Udaipur Udyog Ltd., and he also relies on the Tribunal's decision in the case of Manikgarh Cement Ltd. v. CCE., Nagpur, 2004 (62) RLT 222 (CESTAT -Mum.). He, therefore, submits that the Order -in -Appeal may be set aside and restores the Order -in -Original passed by the Assistant Commissioner of Central Excise, Jsr.

(3.) SHRI Bagaria submits that the Assistant Commissioner levied 100% penalty of Rs. 5,47,479.92 paise upon the respondent under Rule 173Q(1)(bb) of the Central Excise Rules, 1944. The respondent had not done any of the Acts of things warranting invocation of Rule 173Q(1)(bb). They have taken credit under a genuine and bona fide belief and it was lawfully allowable. He submits that the said credit was not utilized by the respondents and it remained unutilized and ultimately the entire credit of Rs. 4,91,428.96 paise was reversed by the respondents without prejudice to its rights and contentions. He submits that the allowability of credit on capital goods physically installed outside the factory premises was in any event a highly debatable issue on which different decisions have been rendered in different situations. In such circumstances and particularly when the said credit remained unutilized and was reversed, there can be no scope to levy any penalty upon the respondents. He relies on the following decisions: