C.Satapathy, - (1.)HEARD both sides.
(2.)The appellants have taken Modvat Credit on Moulds used for manufacture of Steel Ingots. 50 per cent of the same was taken for the year 2000-2001, and the balance 50 per cent was taken in 2001-2002. There was no dispute that the Mould was used in the very first year and they were not existing in the possession of the appellants in the second year and hence the credit has been denied to the appellants and the penalty has been imposed for infraction of the rules.
The Id. Advocate appearing for the appellant states that the moulds have a short life and hence it was not possible for the appellants to have the moulds in their possession during the second financial year. He also states that recognizing this fact, the Govt. has made amendment to the relevant Rule 4(2)(b) of the Cenvat Credit Rules, 2002 to exempt the possession of the moulds during the 2nd Financial Year. However, this amendment has been made w.e.f. 1-10- 2003 and hence this will have the effect prospectively from that date since the said amendment is not retrospective in nature.

(3.)AS such, even though it was beyond the control of the appellants to retain the moulds in their possession during the 2nd Financial year, in view of the necessary legal provision being made only w.e.f. 1-10-2003, the orders passed by the Lower Authority denying the credit cannot be faulted with. However, considering the circumstances of the case, the penalty imposed by the Lower Authority is not justified and the same is set aside.
The appeal is partly allowed.

Dictated and pronounced in the open court.