2003 (7) TMI 554 - AT - Central Excise

Summary

Issues: Availability of Modvat credit on fabricated steel tanks mounted on a chassis under Rule 57Q.

Analysis:
1. Issue of Modvat Credit Eligibility: The appeal concerns the availability of Modvat credit to the appellants for fabricated steel tanks mounted on a chassis. Both lower authorities disallowed the credit, stating these are not eligible capital goods under Rule 57Q.

2. Contentions of the Appellant: The appellant's counsel argued that the tanks are part of the metal rolling mill and qualify as material handling equipment, listed as eligible capital goods under Rule 57Q. Citing precedents like Malabar Cements Ltd. case and Union Carbide India Ltd. case, the counsel asserted the entitlement to Modvat credit.

3. Judicial Analysis: The judge rejected the appellant's contentions. The fabricated tanks, falling under Chapter Heading 87, do not align with the definition of capital goods under Rule 57Q. The judge emphasized that these tanks are not integral to the metal rolling mill's functioning. Therefore, Modvat credit was rightfully disallowed.

4. Alternative Argument - Inputs Eligibility: The appellant's argument to treat the tanks as eligible inputs for Modvat credit was also dismissed. Referring to various case laws, the judge clarified that new arguments cannot be introduced at this stage. The tanks do not meet the criteria for input eligibility as they are not used in manufacturing final products.

5. Final Decision: Concluding that the impugned order was lawful, the judge upheld the Commissioner (Appeals) decision to dismiss the appeal due to lack of merit. The appellants were not granted Modvat credit for the fabricated steel tanks mounted on a chassis.