2005 (7) TMI 468 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit for storage tanks used for gases.
2. Classification of storage tanks as capital goods.
3. Interpretation of Rule 57Q of the Central Excise Rules.

Analysis:
Issue 1: The appellant appealed against the disallowance of Modvat credit for storage tanks used for gases. The Commissioner (Appeals) disallowed the credit, stating that the tanks were solely for gas storage. The appellant argued that the tanks were essential for storing finished goods and relied on a Tribunal decision to support their claim.

Issue 2: The Revenue contended that storage tanks fall under Chapter 73 and were not considered capital goods during the disputed period. The appellant referenced other Tribunal decisions to counter this argument. The Tribunal noted that the tanks were crucial for preventing evaporation and leakages of industrial gases, qualifying them as essential for storage.

Issue 3: The Tribunal considered Rule 57Q of the Central Excise Rules in determining the eligibility of storage tanks for Modvat credit. It differentiated the present case from previous decisions by highlighting the specific use of the tanks for industrial gases. The Tribunal concluded that as per Rule 57Q, the storage tanks qualified as accessories/components of the plant, making them eligible for credit. Consequently, the appeal was allowed, setting aside the earlier disallowance of the credit.