IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA. Excise Ref. No. 7 of 2001 Judgment reserved on: 5.9.2008 Date of Decision: September 15, 008 Commissioner, Central Excise ..Petitioner(s) Versus. M/s Superior Air Products . ..Respondent(s) Coram: The Hon’ble Mr. Justice Deepak Gupta, Judge. The Hon’ble Mr. Justice V.K.Ahuja, Judge. Whether approved for reporting? Yes For the Petitioner(s) : Mr. Sandeep Sharma, Assistant Solicitor General of India. For the Respondent(s) : M/s Sudeep Bhangoo & Rahul Mahajan, Advocates. Deepak Gupta, J. This Excise Reference was admitted on the following question of law:- Whether the Tribunal was correct in allowing Modvat credit in terms of Rule 57Q of the Rules in respect of capital goods where the statutory declarations as required under rule 57T of the Rules was not filed by the party within the prescribed/extended time? The brief facts giving rise to this petition are that the industry- M/s Superior Air Products Limited, Barotiwala is engaged in - 2 - manufacture of gases and compressed air. The industrial unit was set up between 12.2.1994 and 11.3.1995. During this period the industrial unit received a number of capital goods which were installed in the factory site. The unit was duly registered with the Excise Department on 5.1.1995. Though the goods had been received prior to this date, they were actually installed thereafter in March 1995. The industrial unit filed a declaration under the MODVAT scheme on 29.4.1995 claiming credit for the excise payable on the capital goods. They also prayed for condonation of delay in filing the application. In reply to the application of the factory/unit, the department sent a letter on 15.4.1996 wherein the plea was taken that the factory/unit had claimed credit beyond the period of limitation. According to the department, the declaration under Section 57T was required to be filed within the time prescribed regardless of the fact whether the factory/ unit was registered under the Central Excise Act or not. The Assessing Officer after considering the definition of manufacture and factory under the Central Excise & Salt Act, 1944, came to the conclusion that the assessee has filed the declaration within a period of three months and he condoned the delay of two months and granted benefit to the unit. The Commissioner (Appeals) rejected the appeal filed by the department. The department then approached the Central Excise & Gold (Control) Appellate Tribunal (CEGAT)). - 3 - The Tribunal held that the unit only came into existence on 5.1.1995 and three months period had to be reckoned from the said date. The appeal was rejected. Hence the present petition has been filed before this Court. We have heard Shri Sandeep Sharma, learned Assistant Solicitor General for the petitioner and Shri Sudeep Bhangoo learned counsel for the respondent. The stand of the department is that the language of Rule 57T is very clear that the factory/unit should inform the excise department within one month of the receipt of the capital goods to claim credit under the MODVAT scheme. It is urged that whether the factory came into existence or not, if the party wants to claim credit under MODVAT scheme, it must file the returns within one month as prescribed and the maximum extended period which can be condoned is two months. Therefore, any declaration filed beyond three months is time barred and no credit of MODVAT can be given. On the other hand, on behalf of the assessee, it is urged that till the party is registered under the Central Excise Act, the party would not even know where and with when has to file the return or who is its Assessing Officer etc. The relevant portion of Rule 57T of the Rules reads as follows:- “57T (1). Every manufacturer intending to take credit of the duty paid on the capital goods under rule 57Q shall, before receipt of the capital goods, file a declaration with the [ Assistant Commissioner of Central - 4 - Excise or Deputy Commissioner of Central Excise] having jurisdiction over his factory, indicating therein the particulars of the capital goods, description of the final products manufactured in his factory and such further information as the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] may require, and shall obtain a dated acknowledgement of the said declaration. (2) xxx xx xx xx xx xx. (3) In case where a manufacturer was not in a position to make the declaration under sub-rules (1) and (2) and makes the declaration subsequently but ordinarily within a period of one month or in exceptional cases, within a further period not exceeding, in any case, more than another two months from the date of receipt of the said capital goods in the factory, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] may, on sufficient cause being shown to him, allow the filling of the declaration. Factory has been defined in Section 2(e) of the Central Excise Act, as follows:- 2(e). “factory” means any premises, including the precincts thereof, wherein or in any part of which, excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; Manufacture has been defined in Section 2(f), as follows:- “manufacture” includes any process --- (i) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the [First] Schedule to the Central Excise Tariff Act, 1985(5 of 1986) as amounting to manufacture; and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production - 5 - or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. In terms of Rule 57T every manufacturer who wants to claim credit due of the capital goods under Section 57Q is required to file a declaration before receipt of capital goods with the authority having jurisdiction over its factory. On a combined reading of the aforesaid provisions, we are of the considered view that sub-rule (1) of Rule 57T will apply only in the case of an existing manufacturer. Sub-rule (3) of Rule 57T will apply in other cases. Until a factory is registered under the Central Excise Act it cannot be deemed to be a unit or factory within the terms of the Act. Even though, it may not have started manufacturing, it may be deemed to be a factory once it is registered. At this stage also, it may not be a manufacturer within the meaning of Section 2(h) of the Act. It cannot be presumed that the factory had come into existence and had become a manufacturer even before the unit was registered. Therefore, we are in agreement with the authorities that the factory will be deemed to have come into existence on 5.1.1995 when it was registered under the Central Excise Act. The declaration has been filed within three months. The Assessing Officer has condoned the delay of less than two months in filing the declaration on the facts pleaded before him. This is a pure finding of fact. - 6 - Keeping in view the above discussion, we decide the question against the revenue since according to us, the statutory declaration was filed within the extended time prescribed under the rules. The reference is answered and disposed of accordingly. (Deepak Gupta ), J. September 15, 2008 (V.K.Ahuja ), J. s.