[Order]. - In this appeal of the Revenue, the appellant is aggrieved by the grant of Modvat credit of over Rs. 5.85 lakhs to the respondent by the Commissioner (Appeals) in respect of capital goods for the month of August, 1994. The original authority had denied the entire credit to the assessee. A part of the credit was denied on the ground that the relevant invoices were not pre-authenticated and the goods covered thereunder were not consigned to the Viscose Staple Fibre Division of the assessee. The remaining part of the credit was denied on the ground that the capital goods were not eligible for Modvat credit under Rule 57Q. As regards the first part, ld. Commissioner (Appeals) recorded a finding that the non-pre-authentication of invoices was an omission of technical nature which was not to be a ground for denial of Modvat credit in the light of the amendments brought to Rule 57T under Notification No. 7/99-C.E. (N.T.), dated 9-2-1999. He has also found that the goods were consigned to the assessee. I find that these findings have not been specifically challenged in this appeal. Moreover, Modvat credit on capital goods for the period of dispute cannot be disallowed in view of the amended provisions of Rule 57T as held by the Tribunal’s Larger Bench in the case of Kamakhya Steels Pvt. Ltd. v. CCE [ (T-LB) = 2000 (40) RLT 575].
2. However, the order recorded by the Commissioner (Appeals) with regard to the eligibility of capital goods for Modvat credit under Rule 57Q cannot be accepted as a speaking order inasmuch as the order does not disclose the reasons for holding the view that the goods were used by the assessee in or in relation to the manufacture of the final product. Two decisions of the Tribunal have also been referred to in the impugned order, but there is no averment as to how the decisions are applicable. The relevant paragraph in the impugned order is reproduced below :-
“The appellant had submitted detail uses of the items as mentioned in Annexure - A to the show cause notice. All these items are used by the appellant in or in the relation to the manufacture of final products and Modvat is admissible to the appellant in the light of the following cases - Jawahar Mills Ltd. v. Commissioner of Central Excise, Coimbatore - (T) and (S.C.) and also in case of Grasim Cement v. CCE, Raipur reported in (T).”
Ld. Counsel for the respondents has submitted today that all the detailed submissions on the use of the goods in the factory were properly examined by the ld. Commissioner (Appeals) and, on that basis, he arrived at the finding that the goods were used in or in relation to the manufacture of the final products. Ld. Counsel has, therefore, claimed that the order cannot be said to be non-speaking. Ld. SDR has contested this claim.
I am of the view that the order, reproduced above, is not a speaking order on the issue considered by the first appellate authority. May be, the assessee might have given detailed submissions on the use of the goods. It was incumbent on the Commissioner (Appeals) to examine the use and record the same in his order so as to enable the parties to the case to comprehend the ratio of his decision. It is also pertinent to note that the Commissioner (Appeals) was apparently concerned about the use of the capital goods “in or in relation” to the manufacture of final products. It appears, he was carried away by considerations under Rule 57A rather than Rule 57Q. He overlooked the fact that the expression “in relation to” was alien to use of capital goods. Ld. Commissioner (Appeals), apparently, misconceived the issue and rendered a non-speaking order. I have no option but to set aside the aforegiven part of the impugned order and direct the Commissioner (Appeals) to pass a speaking order on the relevant issue.
3. In the result, the impugned order is set aside to the extent it relates to eligibility of capital goods for Modvat credit under Rule 57Q and is upheld in respect of the credit taken on non-pre-authenticated invoices. The appeal is disposed of with a direction to the Commissioner (Appeals) as above. Needless to say that the assessee should be given a reasonable opportunity of being heard on the issue remanded.