2004 (5) TMI 472 - AT - Central Excise

Summary

Issues:
Appeal against denial of Modvat credit for parts of E.O.T. crane falling under Heading 84.31 of Central Excise Tariff, exclusion of parts from definition of capital goods, applicability of Rule 57Q, interpretation of Board's circular dated 2-12-96.

Analysis:
The appeal was filed challenging the Order-in-Appeal denying Modvat credit for parts of an E.O.T. crane under Heading 84.31 of the Central Excise Tariff, arguing that the parts are entitled to credit as per Rule 57Q and the Board's circular. The appellants contended that the Revenue did not dispute the credit for the E.O.T. crane itself, and as per the definition of capital goods under Rule 57Q, components, spares, and accessories are eligible for credit. They relied on the Board's circular from 1996, stating that all parts, components, and accessories used with capital goods are eligible for Modvat credit.

The Revenue, on the other hand, argued that parts of the E.O.T. crane were specifically excluded from the definition of capital goods, pointing out the amendment to Rule 57Q in 1997 which introduced an exclusion clause. However, it was acknowledged that the goods in question were indeed parts of the E.O.T. crane. The Board's circular from 1996 clarified that all parts, components, and accessories used with capital goods are eligible for credit, and this circular was not withdrawn. Therefore, the circular applied to the disputed period. The Tribunal noted that Rule 57Q allowed credit for parts of capital goods specified against Serial Nos. 1 to 4 and that the Board's circular supported the appellants' claim for Modvat credit for the parts of the E.O.T. crane.

Conclusively, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the Board's circular from 1996 remained applicable, and the exclusion clause introduced in Rule 57Q did not preclude the eligibility of parts of the E.O.T. crane for Modvat credit.