1999 (10) TMI 699 - AT - Central Excise

Summary

Issues:
Entitlement to Modvat credit for KSB make pump and Galvanised Iron Pipes, applicability of Notification No. 25/96 for Modvat credit on tubes and pipes, retrospective effect of Notification No. 14/96, eligibility of "Thrm Spl." for Modvat credit as an input under Rule 57A.

Analysis:
1. The main issue in the appeal was the entitlement of the appellants to Modvat credit for KSB make pump and Galvanised Iron Pipes. The consultant for the appellants argued that these items were considered capital goods under Rule 57Q based on previous Tribunal decisions. Reference was made to specific cases supporting this claim.

2. The Revenue's representative contended that the inclusion of pipes under Rule 57Q was through Notification No. 25/96, which was introduced after the period in question. Therefore, Modvat credit for tubes and pipes could not be extended for the relevant period.

3. The consultant for the appellants countered by stating that Notification No. 14/96 was deemed clarificatory with retrospective effect according to Tribunal decisions. Any subsequent notification amending it should also be considered clarificatory.

4. The issue of "Thrm Spl." as a fluid used by the pump was discussed. The consultant argued that while it may not directly qualify for Modvat as a capital good, it was eligible under Rule 57A. Reference was made to a Tribunal judgment supporting this alternative claim under Rule 57A.

5. The Revenue's representative opposed the claim on "Thrm Spl." stating that it did not function as an input in the manufacture of the final product, plywood, and thus did not meet the criteria under Rule 57A.

6. The judgment analyzed the submissions from both sides. It concluded that Modvat credit for pumps and pipes was justified based on previous Tribunal decisions, even before the introduction of Notification No. 25/96. The retrospective effect of Notification No. 14/96 was upheld, allowing Modvat credit under Rule 57Q.

7. Regarding "Thrm Spl.," the judgment found it to be an eligible input under Rule 57A based on its function in carrying and imparting heat to in-process goods. The interpretation of Rule 57A and the classification of "Thrm Spl." as an eligible input were supported by previous Tribunal decisions.

8. Consequently, the appeal was allowed, granting the appellants Modvat credit for the items in question under the relevant provisions. The impugned order was set aside, providing consequential reliefs to the appellants.