2005 (1) TMI 558 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on dust collector filter bags; Interpretation of Rule 57Q regarding credit on pollution control equipment parts.

Analysis:
The appellants contested the disallowance of Modvat credit solely on dust collector filter bags, not on other items classified under sub-heading 2942.00. The appellant's representative argued that dust collector filter bags are integral parts of pollution control equipment in a cement factory, which is essential for a cement plant's operation. Referring to previous Tribunal decisions, the representative emphasized that pollution control equipment is considered part of the manufacturing process and, therefore, eligible for Modvat credit as capital goods under Rule 57Q.

On the other hand, the respondent's representative contended that while credit is permissible on pollution control equipment, it does not extend to parts of such equipment. According to Rule 57Q, credit on components, spares, and accessories is only allowed for specific machineries listed in the rule. The crux of the issue was whether dust collector filter bags should be considered parts of pollution control equipment or the cement plant itself.

The Tribunal noted that the appellants had argued before the Commissioner (Appeals) that pollution control equipment and its parts are integral to the cement mill machinery, citing relevant Tribunal decisions. Despite this, the Commissioner (Appeals) did not address this argument and relied on the show cause notice's assertion that dust collector filter bags were not eligible for Modvat credit. Given the consistent Tribunal decisions favoring the eligibility of dust collector filter bags for credit and the absence of contrary decisions presented by the Revenue, the Tribunal ruled in favor of the appellants. Consequently, the Tribunal set aside the Commissioner (Appeals)'s decision to deny credit on dust collector filter bags while upholding the rest of the Commissioner (Appeals)'s order.

In conclusion, the Tribunal disposed of the appeal by allowing Modvat credit on dust collector filter bags, emphasizing their essential role in the manufacturing process of cement plants and aligning with previous Tribunal decisions supporting their eligibility for credit.