2002 (2) TMI 1006 - AT - Central Excise

Summary

Issues: Denial of Modvat credit on Plates/HR Plates and Welding Electrodes under Rule 57Q of the Central Excise Rules, 1944 for the period 18-2-99 to 7-7-99.

Analysis:
1. Issue of Modvat Credit on Plates and HR Plates:
- The appellants claimed Modvat credit on Plates and HR Plates as capital goods under Rule 57Q. However, the department contended that these items were not eligible capital goods under Rule 57Q. The appellants argued that the Plates were used for the fabrication of capital goods falling under specific chapters. They claimed that the Plates and Welding Electrodes should be considered as components, spares, and accessories of eligible capital goods. The lower authorities denied the credit based on previous tribunal decisions.
- The advocate for the appellant argued that the Plates and HR Plates were used in the fabrication of eligible capital goods and should qualify for Modvat credit under Rule 57Q. He also cited relevant tribunal decisions to support the appellant's claim.
- The Tribunal examined the submissions and found that the Plates and HR Plates were indeed used for the fabrication of specific machinery falling under particular chapters. As these items became part of the machinery, they were considered eligible for Modvat credit under the relevant rule. The Tribunal noted that the lower authorities had misapplied previous decisions and had not properly considered the appellant's specific pleas. Therefore, the Tribunal allowed the Modvat credit on Plates and HR Plates used for the fabrication of a Boiler.

2. Issue of Modvat Credit on Welding Electrodes:
- The question of Modvat credit on Welding Electrodes used in the fabrication of machinery was also raised. The JDR reiterated the findings of the lower authorities.
- The Tribunal referred to a Larger Bench decision that supported the eligibility of Welding Electrodes as capital goods under Rule 57Q. This decision had been approved by the Apex Court. Consequently, the Tribunal allowed the Modvat credit on Welding Electrodes used in the fabrication of machinery.

3. Conclusion:
- In conclusion, the Tribunal allowed the Modvat credit on Welding Electrodes and Plates/HR Plates used for the fabrication of a Boiler. However, the eligibility of Plates/HR Plates used for fabricating a Flock House was remanded to the Commissioner (Appeals) for further examination. The decision on the Flock House machinery's classification would determine the eligibility of Plates/HR Plates under Rule 57Q. The appeal was allowed in part and remanded for further consideration.