2002 (2) TMI 1062 - AT - Central Excise

Summary

Issues Involved:
1. Disallowance of Modvat credit on spares of cooling tower under Rule 57Q.
2. Interpretation of the exclusion clause in the definition of capital goods.
3. Applicability of previous Tribunal judgments on the current case.
4. Classification of spares under heading 84.19 and exclusion from the definition of capital goods.

Analysis:
1. The issue at hand involves the disallowance of Modvat credit on spares of a cooling tower under Rule 57Q. The appellant had reversed the Modvat credit availed on capital goods but faced disallowance on the spares used in the cooling tower, which runs a vapour absorption heat pump. The authorities contended that such spares are excluded from the definition of capital goods under Rule 57Q.

2. The key point of contention was the interpretation of the exclusion clause in the definition of capital goods. The appellant argued that the spares in question were parts of the cooling tower, not the vapour absorption heat pump, and thus should not be excluded. They provided evidence, including invoices and technical bulletins, to support their classification of the spares under heading 84.19, which was not mentioned in the exclusion clause.

3. The appellant challenged the applicability of previous Tribunal judgments, stating they were based on an old definition of Rule 57Q. The Tribunal had since been amended, specifying capital goods by chapters, headings, and tariff headings. The appellant argued that the earlier decisions regarding air-conditioning and refrigerating machinery should not apply to the current case.

4. Ultimately, the Tribunal found in favor of the appellant, setting aside the impugned order and remanding the matter to the Assistant Commissioner for reevaluation. The Tribunal emphasized that the spares classified under heading 84.19 should not be hit by the exclusion clause, as it was not mentioned in the table annexed to Rule 57Q. The decision highlighted the importance of considering the specific classification of goods and the updated provisions of Rule 57Q in determining the eligibility for Modvat credit.