2001 (5) TMI 642 - AT - Central Excise

Summary

Issues Involved:
Appeal against Commissioner (Appeals) order denying Modvat credit on certain items claimed as capital goods under Rule 57Q.

Analysis:
The appeals were filed by the Revenue against the Commissioner (Appeals) order denying Modvat credit on specific items claimed as capital goods under Rule 57Q of the Central Excise Rules, 1944. The items in question were Fibre Glass Shutter, Gypon Terminal, Cerwool Ceramics Fibre Blanket, and Grinding Elements and Grinding Media. The Commissioner (Appeals) had allowed the appeal of the party, setting aside the Original Authority's order, which led to the Revenue's appeal. The Revenue contended that the first two items, Fibre Glass Shutter and Gypon Terminal, were not included in the definition of capital goods under Rule 57Q before 23-9-1996 but were included afterward. However, it was argued that these items were parts of the UPS system regulating power supply for running machines and thus qualified as capital goods. The Madras High Court's decision in M/s. SIV Industries Ltd. v. CCE, Coimbatore was cited to support the broad interpretation of the term 'plant' in the definition of capital goods, encompassing items necessary to make the production process possible. Consequently, the Fibre Glass Shutter, Gypon Terminal, and Cerwool Ceramics Fibre Blanket were deemed eligible for Modvat credit under Rule 57Q.

Regarding the items Grinding Elements and Grinding Media, the party had initially claimed Modvat credit on these as 'inputs' under Rule 57A. The Tribunal's decision in CCE v. New Vikram Cements established that Modvat credit on these items was admissible under Rule 57A. As a result, the Modvat credit was deemed admissible on all the items under consideration. The Revenue's appeal was dismissed as lacking merit, upholding the lower appellate authority's decision. The judgment clarified the eligibility criteria for claiming Modvat credit on specific items as capital goods under Rule 57Q and Rule 57A, providing a comprehensive analysis based on legal precedents and interpretations of relevant definitions and provisions in the Central Excise Rules.