2003 (11) TMI 469 - AT - Central Excise

Summary

Issues: Challenge to disallowance of Modvat credit on capital goods.

Analysis:
The appeal before the Appellate Tribunal challenged the order-in-appeal that upheld the disallowance of Modvat credit on certain capital goods. The appellants argued that the Modvat credit was wrongly disallowed as the goods were covered under Rule 57Q and the corresponding table. On the contrary, the JDR supported the impugned order disallowing the credit. The Tribunal examined the impugned order and the nature of the capital goods in question, which included Interior Compensating Lead Wire, Potassium Thermocouple tips, Celon Al Censor Contact Block, Housing for Lance, and Male Connector, all falling under Heading 90.33 of the CETA. It was noted that these goods were excluded from the definition of capital goods as per the table appended to Rule 57Q.

The Tribunal rejected the appellant's argument that these goods were parts/components of eligible capital goods specified in the table. It was clarified that Modvat credit could only be allowed for parts/components of eligible capital goods specified in Clauses 1 to 4 of the table, and not for goods excluded as capital goods. Since the principal goods to which these items were alleged to be parts/components were classified under Heading 90.32 of the CETA and excluded from the definition of capital goods, the Modvat credit was rightly disallowed. Consequently, the impugned order disallowing the Modvat credit was deemed valid, and the appeal of the appellants was dismissed by the Tribunal.

In conclusion, the Tribunal upheld the decision to disallow the Modvat credit on the capital goods in question, emphasizing that the goods were excluded from the definition of capital goods under Rule 57Q and the corresponding table. The judgment clarified the criteria for allowing Modvat credit on parts/components of eligible capital goods and affirmed that such credit cannot be claimed for goods that do not meet the specified criteria, even if they are considered parts/components of other eligible goods.