2002 (8) TMI 440 - AT - Central Excise

Summary

Issues:
1. Availment of credit of duty paid on spare parts used in reconditioning of machinery.
2. Interpretation of Rule 57Q of Central Excise Rules, 1944.
3. Eligibility of Modvat credit on spares used in machinery reconditioning.
4. Application of previous Tribunal decisions on Modvat credit.

Issue 1: Availment of credit of duty paid on spare parts used in reconditioning of machinery.
The appellants availed credit of duty on spare parts used in reconditioning machinery, leading to a disallowance of Rs. 2,51,130 under Rule 57Q of Central Excise Rules, 1944. The Asst. Commissioner denied the credit, stating that there was no provision for such credit under the rules. The Commissioner (A) upheld this decision, resulting in the appellants appealing to the CCE (A) Bangalore.

Issue 2: Interpretation of Rule 57Q of Central Excise Rules, 1944.
Rule 57Q stipulates the applicability of allowing credit of specified duty paid on capital goods used by the manufacturer in his factory. The Tribunal analyzed the rule and concluded that as long as the disputed items qualify as capital goods and are used as such in the manufacturer's factory, credit should be allowed. The rule does not mandate the installation of spares and components only in the manufacturer's factory.

Issue 3: Eligibility of Modvat credit on spares used in machinery reconditioning.
The Tribunal examined whether Modvat credit on spares used in reconditioned machinery should be allowed. It was established that the spares were incorporated into the refurbished machinery, making them eligible for credit, even if the fitting took place at the refurbisher's premises and not at the appellants' premises. Previous Tribunal decisions supported allowing Modvat credit on such spares used in machinery.

Issue 4: Application of previous Tribunal decisions on Modvat credit.
The Tribunal referenced previous decisions such as Aditya Cement Ltd., CCE Mumbai v. NRC Ltd., and Gujarat Ambuja Cement Ltd. to support their decision on allowing Modvat credit on spares used in machinery. These decisions emphasized that credit should be permitted on spares used in machinery subsequently classified as capital goods, even if the spares were installed outside the factory premises.

In conclusion, the Tribunal set aside the previous orders, allowing the appeal and granting consequential benefits as per the law based on the interpretation of Rule 57Q and the eligibility of Modvat credit on spares used in reconditioned machinery.