2005 (2) TMI 684 - AT - Central Excise

Summary

Issues: Availability of capital goods credit for pollution control equipment.

In this judgment by the Appellate Tribunal CESTAT, CHENNAI, the main issue was whether capital goods credit was available for an Electrostatic Hydraulic Oil cleaner used as pollution control equipment. The lower appellate authority had denied Modvat credit on the equipment, stating that it was used for pollution control before 23-7-1996 and thus not eligible for capital goods credit under Rule 57Q. The Commissioner (Appeals) held that the equipment, being used for pollution control, did not qualify as being used for producing or processing goods for the manufacture of final products. The appellant challenged this decision, citing the Supreme Court's judgment in Indian Farmers Fertilizer Cooperative Ltd. v. CCE [1996 (86) E.L.T. 177 (S.C.)] and a previous order by the same Bench.

The Appellate Tribunal analyzed the lower authority's reasoning and referred to the Supreme Court's judgment in IFFCO v. CCE, where it was established that treatment of effluents for pollution control was an integral part of the manufacturing process. The Supreme Court had ruled that activities like effluent treatment were essential for the manufacture of final products. The Tribunal also mentioned a previous order where capital goods credit was allowed for equipment used in removing waste materials in a sugar factory, considering it part of the manufacturing process. Based on this case law, the Tribunal concluded that the appellants were entitled to Modvat credit on the subject equipment during the disputed period. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed.