Ace Timez Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....that party has not availed 50% of cenvat within the financial year. as per rule 4(2)(a), the cenvat credit in respect of capital goods received in factory at any point of time in a given financial year shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year.3. the counsel appearing for the applicants in support of the stay application submitted that only maximum was prescribed in the said rules and in the instant case since the unit was started at the end of the year, they could not avail within the financial year, nevertheless, same has been availed on 1-4-2001. he also referred to the circular no.199/33/96-cx., dated 23-4-96 wherein it clarifies that in the case of capital goods, it may not be always possible to avail the credit within six months from the date of issuance of the documents. he also relied upon the decision of the tribunal in the case of surya prabha mills ltd. [2002 (149) e.l.t. 929 (tri. - chennai)] in support of his contention that no restriction in the time-limit fixed for taking the credit in respect of capital goods under rules pertaining to availment of modvat credit, referring to the circular.....

Judgment:

1. This stay application is filed by the applicants for the waiver of pre-deposit of duty amounting to Rs. 2,43,720/- and stay of the recovery proceedings.

2. The issue relates to Cenvat credit on capital goods. The Department has disallowed Cenvat credit on capital goods in terms of Rule 4(2)(a) of Cenvat Rules on the ground that party has not availed 50% of Cenvat within the financial year. As per Rule 4(2)(a), the Cenvat credit in respect of capital goods received in factory at any point of time in a given financial year shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year.

3. The Counsel appearing for the applicants in support of the stay application submitted that only maximum was prescribed in the said Rules and in the instant case since the unit was started at the end of the year, they could not avail within the financial year, nevertheless, same has been availed on 1-4-2001. He also referred to the Circular No.199/33/96-CX., dated 23-4-96 wherein it clarifies that in the case of capital goods, it may not be always possible to avail the credit within six months from the date of issuance of the documents. He also relied upon the decision of the Tribunal in the case of Surya Prabha Mills Ltd. [2002 (149) E.L.T. 929 (Tri. - Chennai)] in support of his contention that no restriction in the time-limit fixed for taking the credit in respect of capital goods under rules pertaining to availment of Modvat credit, referring to the Circular referred to above.

4. Shri Narasimha Murthy, Id. DR appearing for the Revenue submitted that the Circular and the decision referred to by the Counsel, was in the context of Modvat Rules. In the instant case, issue relates to Cenvat Rules and in terms of Rule 4(2)(a) of Cenvat Rules, the party was required to avail credit, at least 50%, within the end of the financial year and since this has not been done, the Department was justified in rejecting the claim.

5. I have carefully considered the matter. On going through the relevant rules and the decisions referred to and relied upon by the Counsel, I am of the view that prima facie a case is in favour of the party. In the view I have taken, the stay application is allowed unconditionally.