2003 (10) TMI 589 - AT - Central Excise

Summary

Issues:
1. Availability of Modvat credit on duty paid on M S Rails and hammer for M/s. Ambuja Cement Eastern Ltd.

Analysis:

Issue 1: Modvat credit on duty paid on hammer
- The appeal filed by the Revenue questioned the availability of Modvat credit on duty paid on hammer for M/s. Ambuja Cement Eastern Ltd.
- The learned Advocate for the respondents cited a decision of the Larger Bench of the Tribunal in the case of Madras Cement Ltd. v. CCE, Hyderabad, highlighting that they are not eligible for Modvat credit on the duty paid on the hammer used in the mines.
- Consequently, the Appeal filed by the Revenue concerning the hammer was allowed based on the above argument.

Issue 2: Modvat credit on duty paid on M S Rails
- The discussion then shifted to the issue of Modvat credit on duty paid on M S Rails, which were argued to be accessories to the conveyor system of M/s. Ambuja Cement Eastern Ltd.
- The learned Advocate contended that as per the Supreme Court judgment in Mehra Brothers v. Joint Commercial Officer, the test to determine if an article is an accessory is whether it adds to the convenient use of another part of the main article.
- Referring to Rule 57AA of the Central Excise Rules, 1944, which includes components, spares, and accessories under the definition of capital goods, it was argued that MS Rails qualify as accessories to the conveyor system classified under Chapter 84.
- The Advocate further emphasized that accessories need not only fall under specified chapters, as clarified by the Board in a letter dated 3-4-2000.
- The Tribunal agreed with the submissions made by the Advocate, acknowledging that MS Rails are indeed accessories to the conveyor system, falling under Chapter 84 as specified in Rule 57AA(a)(i).
- Consequently, the Tribunal rejected the Appeal filed by the Revenue concerning the availability of Modvat credit on duty paid on M S Rails.

Overall, the judgment clarified the eligibility of M/s. Ambuja Cement Eastern Ltd. to avail of Modvat credit on duty paid on M S Rails as accessories to their conveyor system, while disallowing the same for duty paid on the hammer used in the mines based on a precedent set by the Larger Bench of the Tribunal.