1. The applications are for dispensing with the pre-deposit of duty Rs. 1,26,11/564/- as wrongly availed Modvat credit besides penalty Rs. 30.00 lakhs on the applicant firm and Rs. 2.00 lakhs on its Additional General Manager is applicant Shri S.R. Bansal.
2. Shri C.S. Lodha the ld. Sr. Counsel appeared for the applicants along with Shri Mayur Shroff. The ld. Sr. Counsel pointed out that the Commissioner has denied the Modvat credit on the ground that the applicants have not been registered under the Central Excise in terms of Rule 174 of Central Excise Rules. However, the application for registration had been made by them on 6-12-1994. It was returned by the department they further requested for authentication of Central Excise records on 14-3-1995 which was also not considered. The finding that applicants have taken credit before filing of Modvat declaration was not actually correct as they had been filing the declaration from time to time. There is also a factual error in the impugned order saying that the applicants have not submitted RT 12 returns for period prior to March 1996; they had in fact submitted Nil RT 12 returns for that period and the question of maintaining RG 1 production account will arise only after factory starts production which was in the month of March 1996. The Commissioner's finding that storage tanks are not capital goods is also not correct in law, because tanks have been held to be eligible for Modvat credit under Rule 57Q in more than one decision of the Tribunal. The ld. Sr. Counsel cited the Tribunal decision in the case of Vivek Alloys Limited v. Commissioner of Central Excise -1998 (98) E.L.T. 156 (Tribunal) where Oxygen tank has been held to be eligible for capital goods Modvat credit under Rule 57Q. The ld.Counsel also pointed out that in the matter of grant of registration under Rule 174, the rule itself provides that if no registration is granted within 30 days it is deemed to have been granted. The Commissioner in the impugned order has not dealt with this aspect of the rule.
2. Shri V.K. Puri the ld. SDR reiterated the finding in the impugned order and opposed the stay.
3. We have carefully considered the submissions made. We find that the applicants have made an application for registration on 6-12-1994 which has been returned to them but the deeming provisions in Rule 174 of the Rules has prima facie not been considered and dealt with in the impugned order; Sub-rule 9 of Rule 174 laid down that proper officer shall grant registration certificate under the Rule within 30 days of the receipt of an application, and if registration certificate is not granted within the said periods, registration applied for shall be deemed to have been granted. Further in respect of availment of Modvat credit under Rule 57Q, during initial setting up of factory, Central Board of Excise & Customs Circular No. 88/88/94-CX, dated 26-12-1994 has also not been considered apparently by the Commissioner. The Board had examined the issue and clarified that the manufacturer intending to take credit of the duty paid on capital goods may continue to file a declaration as required under Rule 57Q irrespective of the fact that such a factory has not come into existence and/or got registered. On the further issue involved in this appeal namely whether tanks can be considered as capital goods for the purpose of Rule 57Q, the case law cited by the applicant is appropriate to this case and prima facie the Commissioner conclusion runs contrary to the Tribunal decision. In these circumstances we hold it will be more appropriate and in the interest of justice to set aside the impugned order itself and remand the matter to the adjudicating authority to consider afresh the whole issue in the light of the provisions of Rule 174 as noted above and the ratio of the above cited decision of Tribunal cited (supra). We therefore, grant stay and remand the case to the Commissioner of Central Excise for adjudication afresh in accordance with law and after hearing the appellants in the matter. The impugned order is set aside and the case is remanded for fresh adjudication.