2004 (4) TMI 492 - AT - Central Excise

Summary

Issues Involved:
1. Modvat credit on capital goods used in the factory.
2. Modvat credit on capital goods partly used in the factory and partly in mines.
3. Modvat credit on capital goods used exclusively in mines.
4. Specific eligibility of items such as Bulldozer, Spares of Loco Engine, Sodium Silicate, Nalcool 2000, Silicon Fluid, and Spares to Dumper for Modvat credit.

Detailed Analysis:

1. Modvat Credit on Capital Goods Used in the Factory:

- Bulldozer (Used in Plant): The appellants argued that the Bulldozer is used for handling raw materials in the factory, thus qualifying as capital goods under Rule 57Q. The Tribunal held that Bulldozers, used as material handling equipment, are eligible for Modvat credit under explanation 1(a) of Rule 57Q(1) of the Central Excise Rules, 1944. This decision was supported by precedents like Larsen & Toubro Ltd. and Vikram Cement.

- Spares of Loco Engine: The Tribunal denied Modvat credit for Spares of Locomotive Engine, stating that the locomotive engine is not a material handling equipment within the factory and is not covered under explanation 1(a) of Rule 57Q(1).

- Sodium Silicate: The Tribunal found that Sodium Silicate, used to arrest leakages, does not qualify as capital goods or inputs under Rule 57Q and Rule 57A, respectively. It is used for maintenance and not for manufacturing the final product, thus not eligible for Modvat credit.

- Nalcool 2000: The Tribunal denied credit for Nalcool 2000, which is used to prevent scaling around cylinder liners in DG sets, stating it is used for maintenance purposes and not as capital goods or inputs.

- Silicon Fluid: Similar to Nalcool 2000, Silicon Fluid, used for maintenance of DG sets, was also denied Modvat credit as it does not qualify as capital goods or inputs under the relevant rules.

2. Modvat Credit on Capital Goods Partly Used in the Factory and Partly in Mines:

- Spares to Dumper: The Tribunal allowed Modvat credit for Spares to Dumper, which are used for transporting limestone from mines to the crusher in the factory. This decision was based on the precedent set in Malabar Cement Ltd. v. Commissioner of Central Excise, Cochin, where dumpers were considered integrally connected with the manufacturing process and thus eligible for Modvat credit.

3. Modvat Credit on Capital Goods Used Exclusively in Mines:

- The appellants did not press for Modvat credit on capital goods used exclusively in mines, and thus the Tribunal disallowed credit for these items.

4. Specific Eligibility of Items for Modvat Credit:

- Bulldozer: Eligible for Modvat credit as material handling equipment within the factory.
- Spares of Loco Engine: Not eligible for Modvat credit as locomotive engines are not considered capital goods under Rule 57Q.
- Sodium Silicate: Not eligible for Modvat credit as it is used for maintenance and not for manufacturing.
- Nalcool 2000: Not eligible for Modvat credit as it is used for maintenance purposes.
- Silicon Fluid: Not eligible for Modvat credit as it is used for maintenance purposes.
- Spares to Dumper: Eligible for Modvat credit as they are used in a process integrally connected with manufacturing.

Conclusion:

The Tribunal allowed Modvat credit for Bulldozers and Spares to Dumper while denying credit for Spares of Loco Engine, Sodium Silicate, Nalcool 2000, and Silicon Fluid. The credit on goods used exclusively in mines was not pressed by the appellants and thus disallowed. The 13 appeals were disposed of accordingly.