2002 (1) TMI 1158 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit on certain items as capital goods and inputs under Central Excise Rules, 1944.

Analysis:
1. The respondents availed Modvat credit on certain items as capital goods and inputs under Central Excise Rules, 1944. The Asstt. Commissioner disallowed the credit amounting to Rs. 1,44,163.70. An appeal was filed, and the Commissioner (Appeals) allowed the appeal.

2. The revenue filed an appeal against the Commissioner (Appeals) order. The challenge was regarding the classification of items under the definition of capital goods as per Rule 57-Q. The Tribunal examined the nature and function of each item in the manufacturing process.

3. The Tribunal found that the items like spares for pump type motor, operating supplies of Bakelite Phenolil, electric cable, polishing bowl, and nozzle holder/lock were covered under the definition of capital goods as per the Explanation to Rule 57-Q. Citing a Supreme Court case, the Tribunal rejected the revenue's appeal concerning these items.

4. Regarding the items 'Clean Flow' and Magnesia Carbon Bricks, the lower appellate authority allowed the Modvat credit under Rule 57-A. 'Clean Flow' was considered an input for cleaning water, while Magnesia Carbon Bricks were seen as refractory lining providing safety against severe conditions. The Tribunal upheld the lower authority's decision on 'Clean Flow' but remanded the decision on Magnesia Carbon Bricks for a detailed explanation.

5. The Tribunal rejected the revenue's appeal except for the item 'Magnesia Carbon Bricks,' which was remanded to the lower appellate authority for a thorough reconsideration and a detailed decision. The overall appeal was disposed of accordingly.