2003 (9) TMI 638 - AT - Central Excise

Summary

Issues: Availability of Modvat credit for a computer controlled freezer drier machine with chilling cabinet.

Analysis:
The appeal was filed against the Order-in-Appeal denying Modvat credit for a computer controlled freezer drier machine with chilling cabinet. The Commissioner (Appeals) upheld the denial, stating the goods were not capital goods under Rule 57Q. The appellant argued that the machine was used to process herbs for manufacturing Ayurvedic Medicines, falling under Clause (a) of the Rule. Citing a Supreme Court case, the appellant contended the machine should be considered a capital good. The Departmental Representative supported the impugned order's correctness.

Upon review, it was established that the machine was indeed used in processing herbs for Ayurvedic Medicines production, meeting the definition of capital goods under Clause (a) of the Rule. The machine's use for bringing about a change in substances for manufacturing final products aligned with the Rule's provision. Referring to the Supreme Court case, it was noted that if a machine is used in or in relation to manufacturing final products, it qualifies as a capital good eligible for Modvat credit. Consequently, the appellants were deemed entitled to avail the Modvat credit for the disputed amount on the machine. The impugned order denying the credit was set aside, and the appeal was allowed with any consequential relief permissible under the law.