2004 (3) TMI 659 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit on Air Conditioners under Rule 57U of Central Excise Rules, 1944.
2. Applicability of Notification No. 6/97, dated 1-3-1997 on the eligibility of Air-Conditioners as capital goods.
3. Interpretation of Rule 57Q of Central Excise Rules, 1944 regarding credit on Air-Conditioners for manufacture of final products.

Analysis:
1. The appeal was filed against the disallowance of Modvat credit on two Air Conditioners under Rule 57U of Central Excise Rules, 1944. The Deputy Commissioner of Central Excise had disallowed the credit and imposed a penalty, which was upheld by the Commissioner (Appeals) in the impugned order.

2. The appellant contended that Air-Conditioners were essential for their manufacturing activity, citing the decision of the Hon'ble Apex Court in the case of Jawahar Mills, which held Air-Conditioners as eligible capital goods. The appellant also relied on decisions such as JCT Electronics and Pearl Polymers Ltd. However, the Revenue argued that Notification No. 6/97, dated 1-3-1997, excluded Air-Conditioners from being considered as capital goods for the purpose of availing credit.

3. The Tribunal analyzed Rule 57Q of the Central Excise Rules, 1944, which excluded refrigerating and air conditioning appliances falling under sub-heading 8415.00 from being eligible as capital goods for credit. The Tribunal noted that the cases cited by the appellant were not applicable as they were decided before the issuance of Notification No. 6/97, dated 1-3-1997, which revised the rules regarding credit on capital goods. Therefore, the Tribunal found no merit in the appeal and upheld the decision to deny credit on Air-Conditioners, as per the relevant provisions and notifications in force at the time.