2003 (12) TMI 444 - AT - Central Excise

Summary

Issues:
- Modvat credit on capital goods under Rule 57Q
- Admissibility of Modvat credit on entire duty paid by job worker

Modvat credit on capital goods under Rule 57Q:
The appeal was against the Commissioner (Appeals) order allowing Modvat credit of Rs. 36,010 on capital goods to the respondents under Rule 57Q for the period May 1998. The appellants, engaged in manufacturing VP sugar and molasses, had a rotor assembly as one of their capital goods, which was undisputedly eligible under Rule 57Q for Modvat purposes. The dispute arose when the job worker repaired the machine using fresh inputs and cleared it to the appellants under Rule 52A invoice, leading to the Department challenging the Modvat credit taken by the appellants. The Department contended that Modvat credit was admissible only on the duty paid by the job worker on the new inputs used, not on the entire duty amount paid under the invoice.

Admissibility of Modvat credit on entire duty paid by job worker:
The Tribunal referred to a previous case where capital goods duty credit was allowed to a sugar manufacturer under Rule 57Q for a machine that underwent duty at the end of the job worker on the entire invoice value, including the machine price and job work charges. The Tribunal upheld the decision in that case, stating that credit of the duty paid by the job worker on the entire assessable value was available to the assessee. The Tribunal found the ratio of the previous decision applicable to the instant case, where the job worker cleared the repaired machine to the assessee on payment of duty on the total assessable value. As a result, the Tribunal rejected the appeal of the Revenue, concluding that there was no reason to interfere with the Commissioner (Appeals) decision.

In summary, the judgment upheld the admissibility of Modvat credit on capital goods under Rule 57Q and affirmed that the credit of duty paid by the job worker on the entire assessable value, including machine price and job work charges, was available to the assessee. The Tribunal rejected the Revenue's appeal, citing the applicability of a previous decision and finding no grounds to interfere with the Commissioner (Appeals) order.