2001 (12) TMI 585 - AT - Central Excise

Summary

Issues:
Whether computers and peripherals can be considered as eligible inputs for Modvat credit.

Analysis:
The case involved seven appeals by M/s. Water India (P) Ltd. regarding the eligibility of computers and peripherals as inputs for Modvat credit. The main issue was whether these items could be considered eligible inputs under Rule 57A for availing Modvat credit. The Department had issued a show cause notice denying Modvat credit on the grounds that computers and peripherals were not eligible inputs. The Assistant Commissioner and Commissioner had both denied the Modvat credit, considering the items as mere 'accessories.' The appellant contested this decision through the appeals.

Shri Raghuraman, the advocate for the appellants, highlighted the essential function of the HPCL, emphasizing the need for automation, accuracy, and reliability in complex chemical operations. He argued that computers and peripherals were crucial components in ensuring precise flow rates, accurate analysis of fluids, and controlling the manufacturing process. Referring to previous Tribunal decisions, Raghuraman established that computers could be considered integral parts of equipment and were eligible for Modvat credit.

On the other hand, Shri Narasimha Murthy, representing the Revenue, attempted to justify the lower authority's decision that computers and peripherals were mere 'accessories.' However, the argument was unsuccessful.

After considering the submissions from both sides and the relevant case law cited by the appellant's counsel, the judge concluded that computers and peripherals were indeed integral parts of the HPCL. Since the value of these items was included in the final product, the judge found no valid reason to reject the Modvat credit claimed by the assessee. Consequently, all seven appeals were allowed in favor of the appellant, establishing the eligibility of computers and peripherals as inputs for Modvat credit under Rule 57A.