2003 (4) TMI 417 - AT - Central Excise

Summary

Issues: Modvat credit eligibility for air-conditioning unit used in the control room.

Analysis:
1. Issue of Modvat Credit Eligibility: The appeal by the revenue challenges the Order-in-Appeal allowing Modvat credit on an air-conditioning unit used in the control room. Revenue argues that the air-conditioner is not involved in production or processing but only circulates cool air for comfort. They rely on a previous Tribunal judgment that disallowed Modvat credit for air-conditioners not falling under Rule 57Q. The revenue contends that the air-conditioner does not participate in the production process. However, the respondent argues that a Larger Bench judgment and an Apex Court decision support their entitlement to Modvat credit for the air-conditioning unit used in the factory for controlling air temperatures.

2. Maintainability of Appeal: The revenue asserts that their appeal is maintainable despite technical objections raised by the respondent's counsel regarding the settlement under the KVS Scheme 1998. The revenue argues that the departmental appeal involving duty disputes is protected under the KVS Scheme, making their appeal valid. The respondent concedes the technical point and acknowledges the maintainability of the appeal.

3. Judgment Analysis: The Tribunal, after considering both parties' submissions, rules that the air-conditioning unit qualifies as a capital good under Rule 57Q of the CE Rules, 1944. The Tribunal finds that the air-conditioning unit, used in the factory's control room, is eligible for Modvat credit. Since there is no evidence that the unit was used in the office, the Tribunal confirms the Order-in-Appeal allowing the Modvat credit on the air-conditioning unit. The Tribunal rejects the revenue's appeal, upholding the decision in favor of the respondent.

In conclusion, the Tribunal's judgment affirms the eligibility of Modvat credit for the air-conditioning unit used in the factory's control room, considering it as a capital good covered under Rule 57Q. The decision highlights the importance of the specific usage context of the equipment in determining its eligibility for Modvat credit, ultimately ruling in favor of the respondent and rejecting the revenue's appeal.