Case: Commissioner of Central Excise Vs. M/S. Modernova Plastyles Private Limited &amp; Another

2. The factual position is that theis engaged in manufacture of plastic articles/components and parts by using injection moulding machines. In the present matter the moulds, used to manufacture, in this case cabinets for television sets the finished product, were supplied to the Assessee by the Original Equipment Manufacturers. The dispute relates to the years. A show cause notice came to be issued on 27th October, 1999 alleging that the assessee has availed and utilized inadmissible Modvat Credit on the moulds as capital goods to the tune of Rs.35,49,659/in contravention of Rules 57Q, 57R(3) and 57(T) of Central Excise Rule, 1944. The show cause notice has been issued for the reason that the Assessee is neither owner of the capital goods nor has it hired the same on lease,or loan agreement from the financer.4. The show cause notice was replied by the Respondents, pointing out that as alleged in the show cause notice, it was not necessary that the moulds should be owned by the assessee since Rule 57Q and 57R underwent amendments after 1994.

Reasoning:
11. In the present case undisputedly theis engaged in manufacturer of plastic articles /components and parts by using injection moulding machines and manufactures finished goods as per the requirement of the original equipment manufacturers. It is not in dispute that the moulds supplied by the supplier are capital goods. The moulds used for injection moulding machine to manufacture the goods/finished products were supplied to the respondent assessee by original equipment manufacturer. These were duty paid moulds by the original manufacturer. Credit of the duties on moulds was being taken by the assessee. It is also not in dispute that the moulds supplied by the supplier are capitalis considerable force in the submissions of Mr. Patil that it is not necessary that capital goods shall be owned or be acquired by theand that assessee cannot be denied credit on the said ground.14. In the present case there is no dispute that duty paid on capitalwere supplied by the original manufacturer to the assessee. Perusal of rules before and after amendment the requirement of ownership was in the erst while regime upto 1994 as governed by then subsisting rules. After 1994, sub rule 3 of Rule 57R having under gone amendment to it, removed such requirement of ownership/acquisition from financing agency. For taking credit of duty paid on said goods, it would not be necessary that capital goods shall either be owned by the assessee or those shall be acquired by finance from financing agency. Denial of credit based on such ground is unsustainable.15. We therefore consider that having regard to the prevailing legal position applicable to the case of the respondent assessee, Modvat/Cenvat credit cannot be disallowed to the assessee and it would be entitled to the same. We also consider that the decision of the Tribunal in the case of Terene Fibres India Pvt. Ltd. vs. Commissioner of Central Excise Mumbai VI would be of no assistance to the appellant Revenue to carry forward its case, for, it cannot be said that in the said case there has been conclusive decision as is being assumed by the appellant revenue. Further having regard to the various decisions relied on behalf of the respondent assessee the decision relied on behalf of the appellant revenue is of little efficacy from position emerging from decision rendered by the Supreme Court in Marmagoa Steel Ltd. (supra) and other orders passed by this Court as well as decisions of Gujrat and PunjabHaryana High Courts.