2002 (1) TMI 994 - AT - Central Excise

Summary

Issues:
1. Challenge to Modvat credit on certain input items/capital goods.
2. Modvat credit on aluminium pipes, tubes, sliver cans, and humidifier under Rule 57Q.
3. Modvat credit on cots and aprons as input under Rule 57A.

Analysis:

1. The judgment deals with the challenge to Modvat credit on specific input items and capital goods. The respondents manufacture 'Cotton Yarn & Synthetic Staple Fibre Yarn' and avail Modvat credit on inputs and capital goods. The Commissioner (Appeals) allowed the credit on certain items, contested by the Revenue. The Tribunal considered each item individually based on facts and submissions.

2. Regarding the Modvat credit on aluminium pipes, tubes, sliver cans, and humidifier under Rule 57Q, it was argued that these items qualify as capital goods. The Tribunal found that these items fall within the definition of capital goods as per the Explanation to Rule 57Q, citing a Supreme Court judgment. Consequently, the Department's appeal against these items was rejected.

3. The dispute over Modvat credit on cots and aprons as input under Rule 57A arose. The Revenue contended that these items should be considered part of machinery and not as inputs. The respondents argued that these items are covered under Rule 57A, referencing legal precedents. The Tribunal noted that items covered under Rule 57Q for Modvat credit as capital goods cannot also claim credit under Rule 57A. It was determined that cots and aprons, by their function in the manufacturing process, qualify as capital goods under Rule 57Q. The appeal regarding inadmissibility of Modvat credit on cots and aprons under Rule 57A was upheld. However, the matter was remanded for fresh consideration on the claim of Modvat credit under Rule 57Q. Additionally, the appeal for Rs. 1,880 Modvat credit on the original invoice was allowed, as uncontested by the respondents.

In conclusion, the Tribunal set aside the impugned order, remanded the Revenue appeal on cots and aprons to the original authority, allowed the appeal for Rs. 1,880 Modvat credit, and rejected the appeal for other items. The judgment provides a detailed analysis of the eligibility of specific items for Modvat credit under relevant rules and legal precedents.