2004 (7) TMI 564 - AT - Central Excise

Summary

Issues: Validity of Modvat credit on air compressor parts under Tariff Heading 8414.80

Analysis:
1. Issue of Modvat Credit Validity: The appeal concerns the validity of the impugned order-in-appeal where the Commissioner (Appeals) allowed Modvat credit for air compressor parts falling under Tariff Heading 8414.80. The Revenue contested this decision, arguing that these items are excluded from capital goods under Rule 57Q clause (2) of the Rules.

2. Arguments Presented: The learned Counsel reiterated the grounds before the Tribunal, emphasizing the classification of air compressors under a specific tariff heading. On the contrary, the learned JDR contended that air compressors and parts are explicitly excluded from the purview of capital goods under Rule 57Q clause (2) of the Rules.

3. Judgment Analysis: After hearing both sides and reviewing the records, the Tribunal found that the respondents claimed Modvat credit on spare parts of the compressor amounting to Rs. 6,450.51. The Tribunal noted that these items are excluded from Rule 57Q and classified under Heading 84.14 of the Central Excise Tariff Act. The Tribunal rejected the argument that the air compressors were of a special type covered under a different heading, stating that they were used for general purposes in air-conditioner plant and machinery. As per the table appended to Rule 57Q, compressors under Heading 84.14 and air-conditioner machinery are excluded from the definition of capital goods, thus disallowing the Modvat credit claimed by the respondents.

4. Decision: Consequently, the Tribunal set aside the Commissioner (Appeals) order and restored the decision of the Adjudicating Authority. The appeal of the Revenue was accepted, affirming that Modvat credit on the air compressor parts under Tariff Heading 8414.80 was not legally claimable under Rule 57Q of the Rules.

In summary, the judgment resolved the issue by clarifying the classification of air compressor parts under the Central Excise Tariff Act and the exclusion of such items from the purview of capital goods for claiming Modvat credit under Rule 57Q.