GAIL (INDIA) LTD. Vs. CCE

JUDGEMENT

(1.) In this appeal, filed by M/s, GAIL (India) Ltd., the issue involved relates to eligibility to avail MODVAT Credit in respect of capital goods under Rule 57Q of the Central Excise Rules, 1944.

(2.) Shri B.L. Narasimhan, learned Advocate, submitted that the appellants manufactured HDFE/LLDPE, Ethylene, Propylene, Butene 1, etc; that they commenced the erection and commissioning of U.P. Petrochemical Project in 1944; that this project was commissioned and commercial production of various products was started in March, 1999; that in 1994, both foreign and indigenous suppliers started despatch of various items required for setting up of the Petrochemical Project; that the supply was spread over a period of 5 years; that after obtaining the Central Excise registration in December, 1994, they had started availing the MODVAT Credit of the duty paid on the capital goods; that the Department has disallowed the MODVAT Credit on various grounds which are as under :

(3.) He mentioned that MODVAT Credit amounting to Rs. 44,119,504 had been disallowed to them on the ground that Modvat declaration had not been filed by them before taking the MODVAT Credit; that, however, it has been held by the Department that on merits they are eligible for the MODVAT Credit in respect of the impugned items; that the finding is factually incorrect as due declaration for all the items had been filed and for delay in filing the declaration, the necessary request for condoning the delay had also been filed; that Rule 57T of the Central Excise Rules, 1944 was amended by Notification No. 7/99 -CE (NT) by which Sub -rule (13) was inserted in Rule 57T; that Sub -rule (13) provided that the credit shall not be denied on the ground that the declaration does not contain all the details required to be contained therein or the manufacturer fails to comply with any other requirement under Sub -rule (1); that the Board also clarified vide Circular No. 441/7/99 -CX dated 23.2.1999 that as long as the capital goods have been in the manufacture of dutiable goods and have actually suffered excise duty, the credit cannot be disallowed. He, therefore, submitted that in respect of these items credit is not disallowable to them.