2003 (10) TMI 526 - AT - Central Excise

Summary

Issues:
Whether electro pneumatic special purpose machine, balancing machine, gauges, and load cell used in the manufacture of clutch assemblies would be considered as capital goods within the meaning of Rule 57Q and whether the duty paid on them is available as credit.

Analysis:
In this judgment by the Appellate Tribunal CESTAT, Mumbai, the main issue at hand was to determine whether certain machines used in the manufacture of clutch assemblies could be classified as capital goods under Rule 57Q and if the duty paid on them could be considered for credit. The Commissioner (Appeals) had previously ruled that since the goods were not directly involved in the production or processing of the final product, they did not qualify as capital goods.

Upon examination, it was found that the electro pneumatic special purpose machine, balancing machine, gauges, and load cell played crucial roles in ensuring the correct dimensions and parameters of the components of the clutch assembly. These machines were indispensable for the manufacturing process, as they checked design parameters, proper balance, dimensions of teeth splined hubs, and load capacity of the clutch cover. It was established that the goods in question fell within the definition of "capital goods" as per Rule 57Q.

The judgment referenced a previous decision by the Supreme Court in CCE v. Jawahar Mills Pvt. Ltd., 2001 (132) E.L.T. 3, indicating that the principles applied in that case were relevant to the current situation. It was concluded that the electro pneumatic special purpose machine, balancing machine, gauges, and load cell were indeed capital goods essential for the manufacturing process of clutch assemblies.

As a result, the appeal was allowed, and the impugned order by the Commissioner (Appeals) was set aside. The machines in question were recognized as capital goods eligible for duty credit, emphasizing their critical role in the manufacturing process of clutch assemblies.