2005 (6) TMI 312 - AT - Central Excise

Summary

Issues: Modvat credit eligibility for mild steel materials used as accessories for a boiler.

Analysis:
1. The appellant took Modvat credit for mild steel materials used as accessories for a boiler under Rule 57Q of the Central Excise Rules, 1944. The Commissioner visited the factory, confirmed the utilization of these items for erecting the boiler, and noted that they were permanently fixed to keep the boiler stationary. The Commissioner relied on Board Circular No. 276/110/96-TRU, allowing parts, components, and accessories used with capital goods for Modvat credit. The Commissioner cited relevant judgments to support granting the benefit, emphasizing that the accessories had become integral to the boiler, making it eligible for Modvat credit under Rule 57Q.

2. The Revenue appealed the Order-in-Appeal, arguing that the items were not accessories of the boiler and that the Commissioner should not have granted the Modvat credit. The Revenue also mentioned pending appeals against Tribunal orders cited by the Commissioner. The appellant contended that the issue had been previously decided by the Tribunal in various cases. However, upon hearing both sides, the judge found that the Revenue failed to provide strong grounds for denying the Modvat credit on the accessories. The judge upheld the Commissioner's decision, noting that the items were indeed used as accessories for the boiler, as verified during the factory visit. The judge emphasized that the accessories used with capital goods were eligible for Modvat credit, as per the relevant circular and supported by previous judgments on similar issues.

3. In the final analysis, the judge concluded that the Commissioner's order was legally sound and correctly granted the Modvat credit for the accessories used with the boiler. The judge highlighted that the items in question had become integral to the boiler's functioning and were eligible for the benefit under Rule 57Q. The judge rejected the Revenue's appeal, emphasizing the importance of considering the factual utilization of the items and their permanent fixation to support the boiler's operation. The decision was made based on the Commissioner's thorough verification and alignment with the applicable circular and precedent judgments.