2003 (11) TMI 439 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal allowing Modvat credit on Cylindrical Vertical HDPE Tanks as capital goods.

Analysis:
The Revenue filed an appeal against the Order-in-Appeal passed by the Commissioner (Appeals) allowing the benefit of Modvat credit on Cylindrical Vertical HDPE Tanks as capital goods. The Revenue contended that the tanks in question do not fall under the definition of capital goods and cannot be considered as accessories of the main processing plant. However, the respondents argued that these tanks are essential for the manufacturing process in the factory as they are used as accessories to the main processing plant. The tanks are specifically used to measure chemicals/liquids that are transferred to mixing tanks through pipes and fittings. The mixing process requires precise quantities of various chemicals, and without these cylindrical vertical tanks, the respondents would not be able to complete the manufacturing process of their final product. The adjudicating authority accepted this argument and dropped the proceedings, classifying the tanks as essential parts/accessories of the mixing process/mixing tanks under Tariff Heading 8479.90. The Revenue's appeal was dismissed by the Commissioner (Appeals).

The Appellate Tribunal noted that the cylindrical vertical tanks are indeed used as measuring equipment and are connected to the mixing tanks, a fact which was not disputed by the Revenue. Considering this factual position, the Tribunal found no error in the Order-in-Appeal that allowed the Modvat credit on these tanks as capital goods. Therefore, the appeal filed by the Revenue was rejected.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) to allow Modvat credit on the Cylindrical Vertical HDPE Tanks as capital goods, considering their essential role in the manufacturing process as accessories to the main processing plant. The factual use of these tanks for measuring chemicals/liquids and their connection to mixing tanks supported the classification under Tariff Heading 8479.90, leading to the rejection of the Revenue's appeal.