2005 (5) TMI 520 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on shelling and grooving charges incurred by the appellants.

Analysis:
The appeal was filed against the denial of Modvat credit on charges for shelling and grooving. The appellants had not claimed Modvat credit on the shaft, a capital goods used in manufacturing sugar and molasses, but on charges paid to a job worker for shelling and grooving. The Tribunal noted that Modvat credit can only be claimed on duty paid on goods, whether capital goods or inputs. Since the charges for shelling and grooving were not on the duty paid at the time of purchase, the credit was rightly denied. The Tribunal cited the case of Simbhaoli Sugar Mills Ltd. where expenses on repair of capital goods were held inadmissible for Modvat credit, establishing a precedent.

The Tribunal distinguished another case, Doiwala Sugar Co. Ltd., where Modvat credit was allowed on capital goods repaired by a job worker. In that case, the credit was claimed on the capital goods themselves, including labor charges paid by the job worker. However, in the present case, the credit was sought only on charges for shelling and grooving, not on the capital goods. Therefore, the Tribunal found no merit in the appeal and dismissed it, as the charges for shelling and grooving did not qualify for Modvat credit under the applicable rules.