M-S. SARVESH REFRACTORIES (P) LTD. v. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS

Citation: [2007] 12 S.C.R. 444

Court: Supreme Court of India

Bench: ASHOK BHAN, V.S. SIRPURKAR

Case summary

M-S. SARVESH REFRACTORIES (P) LTD. v. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS.pdf

Judgment text

""-- MIS. SARVESH REFRACTORIES (P) LTD. v. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS NOVEMBER 22, 2007 (ASHOK BHAN AND V. S. SIRPURKAR, JJ. ] ~ Central Excise Rules, 1944-r. 570 and 1730 (bb)-Purchase of 'Loadall' by assessee from manufacturer/supplier-Manufacturer paying the duty under heading 84. 29-Claim ofMODVAT credit by assessee classifj;ing the item under heading 84. 27-Revenue denying the credit and imposing penalty-Held: Assessee not entitled to MOD VAT credit-He, as a consumer, could not get the classification ofthe item changed to heading 84. 27from 84. 29 as declared by the manufacturer-Central Excise TariffAct, 1985-Tariffheading84. 27. ,). Appellant-assessee purchased 'Loadall' from its manufacturer/ supplier. The cost element ofthe good included excise duty. Assessee claimed MODVAT credit in respect ofthe said item under Rule 570 of the Central Excise Rules, 1944.

The authority disallowed the same on the ground thatthe manufacturer had paid duty on the item, classifying the same under Heading84. 29 and Rule 570 was not applicable to that Heading. The authority also imposed penalty under Rule 1730 (bb). In appeal, appellant-assessee was held to be entitled to the MODVAT credit. Tribunal denied the same, holding that the item having been classified by the manufacturer under Heading 84. 29, the assessee, as a consumer could not get the classification changed to 84. 27. Hence the present appeal. Disposing ofthe appeal, the Court HELD: Appellant could not get the classification of 'Loadall' changed to Heading84. 27 from 84. 29 as declared by the manufacturer. Insofar as thepenalty imposed by the authority-in-original is concerned, M/S. SARVESH REFRACTORIES (P) LTD. v. COMMNR. 445 OF CENTRAL EXCISE & CUSTOMS [BHAN, J. ] a case for imposition ofpenaltyis not made out and accordinglythe same is set aside and deleted.

[Para 6] [446-C, DJ CIVIL APPELLAT': JURISDICTION: Civil Appeal No. 1824 of 2002. From the Judgment and final Order No. A-860-KOL/2001 dated 10. 9. 2001 ofthe Customs Excise·& Gold (Control) Appellate Tribunal Eastern Bench, Kolkata in Appeal No. E/294/2001. Rajesh Kumar, Rajiv Roy, A. C. Pradhan and S. K. Patri (for Praaab Kumar Mullick) for the Appellant. V. Shekhar, P. Narsimhan, Pradeep K. Dubey and Abhigya (for B. V. Balaram Das) for the Respondent. The Judgment ofthe Court was delivered by ASHOK BHAN, J. 1. Being aggrieved by the order dated 10th September 2001 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (Now known as Customs, Excise & Service Tax Appellate Tribunal) [for short 'the Tribunal] in Appeal No. E-294/2001, the assessee-appellant has filed the present appeal. 2. The appellant purchased 'Loadall' from Mis. Escorts JCB Ltd. The cost element of the 'Loadall' included excise duty to the tune of Rs. 1,79,328/-.

The appellant claimed MODVAT credit in respect ofthe said item under Rule 57Q ofthe Central Excise Rules, 1944 (for short, 'the Rules'). 3. Since the said item had been classified by Mis. Escorts JCB Ltd. , the manufacturer and supplier, under Heading 84. 29 and had paid duty under the said heading, the authority-in-original, viz. , Dy. Commissioner disallowed the MODYAT credit to the appellant by observing that the said Heading 84. 29 has been specifically ousted from the definition of G "capital goods" under Rule 57Q ofthe Rules. The Dy. Commissioner also imposed a penalty ofRs. 50,000/- under Rule l73Q(bb) of the Rules. 4. On appeal filed by the appellant, the Commissioner (Appeals) observed that 'Loadall' being an improvised version ofmaterial handling --,.. _. ' equipment would properly fall under Heading 84. 27 and not under Heading 84. 29. It was further observed that forklift truck or crane or similarmaterial handling equipments have been held to be eligible capital goods.

On this finding, the Commissioner (Appeals) held that the appellant would be entitled to claim MODVAT credit. 5. Revenue, being aggrieved, filed an appeal before the Tribunal ; which was accepted by setting aside the order of the Commissioner )- (Appeals) and restoring that ofthe authority-in-original. It was held that the 'Loadall' having been classified by the Central Excise Officer having jurisdiction over the manufacturer's factory as falling under Heading 84. 29, the appellant, who is the consumer of those goods, could not get the classification ofthe manufacturer changed from 84. 29 to 84. 27. 6. The finding recorded by the Tribunal is unexceptionable. We agree with the view taken by the Tribunal that the appellant could not get the classification of 'Loadall' changed to Heading 84. 27 from 84. 29, as declared by the manufacturer.

Insofar as the penalty imposed by the A authority-in-original is concerned, we are of the view that a case for imposition ofpenalty is not made out and accordingly the same is set aside and deleted. Rest ofthe order ofthe Tribunal restoring the order ofthe authority-in-original is continued. 7. Counsel for the appellant has raised an alternate argument on the interpretation ofRule 57Q ofthe Rules which had not been raised either in reply to the show cause notice or before any ofthe authorities below. Under the circumstances, we do not permit the appellant to raise this alternate submission. A- 8. The appeal is disposed ofaccordingly with no order as to costs. K. K. T. Appeal disposed of. >-, '..