2004 (2) TMI 619 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit on welding electrodes and iron/steel plates under Rule 57Q.

Analysis:
1. Dispute Background: The appellants, manufacturers of VP Sugar and molasses, took Modvat credit on welding electrodes and iron/steel plates during August-September 1999 for repairs and maintenance of machinery. The department disallowed the credits, leading to a demand of Rs. 52,898.83, which was confirmed by the Deputy Commissioner of Central Excise and the Commissioner (Appeals).

2. Appellant's Arguments: The appellants argued that welding electrodes were eligible for Modvat credit as per the Table annexed to Rule 57Q, citing precedents like Jawahar Mills Ltd. v. CCE and Rosa Sugar Works v. CCE. They contended that the Tribunal's decision in Rosa Sugar Works was no longer valid and that the Final Order in the same case had been affirmed by the Supreme Court.

3. Respondent's Counter: The DR contended that post the amendment to Rule 57Q on 1-3-97, Modvat credit admissibility was based on the Tariff classification of capital goods. The welding electrodes and MS Plates fell under specific Tariff Headings, excluding them from eligible capital goods under Rule 57Q during the dispute period.

4. Judgment Analysis: The Tribunal examined the submissions and found that the goods in question, welding electrodes (Heading 83.11) and MS Plates (Heading 72.08), were not eligible capital goods under Rule 57Q during August-September 1999. The decisions cited by the appellants were rendered for periods pre-1-3-97 and were not applicable post the law change. As the goods did not fall under eligible entries of the Table annexed to Rule 57Q, the Modvat credit disallowance was upheld, and the appeal was rejected.

5. Conclusion: The Tribunal concluded that Modvat credit on welding electrodes and MS Plates was not available during the dispute period. The decision was based on the exclusion of these goods from eligible capital goods under Rule 57Q, as per their Tariff Headings. The impugned order disallowing the credits was upheld, and the appeal was dismissed.