2005 (8) TMI 493 - AT - Central Excise

Summary

Issues:
1. Eligibility of capital goods used in mining area for Modvat credit under Rule 57Q.
2. Requirement of an "approved plan" for registered manufacturers.
3. Whether mining area can be considered part of the cement factory.
4. Eligibility of "structurals" used for fabricating support to transformer for capital goods credit.

Analysis:

Issue 1: Eligibility of capital goods in mining area for Modvat credit under Rule 57Q
The case involved a dispute regarding the eligibility of capital goods used in the mining area of cement manufacturers for Modvat credit under Rule 57Q. The Revenue contended that the mining area could not be considered part of the factory for the purpose of Rule 57Q, citing relevant legal provisions and precedents. The Tribunal agreed with the Revenue's view, relying on judgments of the Supreme Court in similar cases. It was held that the capital goods used in the mining area were not eligible for Modvat credit under Rule 57Q as they did not qualify as being used within the factory for the production of the final product.

Issue 2: Requirement of an "approved plan" for registered manufacturers
The report received from the Commissionerate raised the issue of whether an "approved plan" was required for registered manufacturers. The consultant for the appellant argued that under Rule 44(3), a Certificate of Approval was necessary for registered manufacturers who submitted their factory plan. However, the consultant contested the department's claim that there was no legal requirement for an "approved plan." The Tribunal noted the absence of an "approved plan" and the consultant's reference to relevant provisions and instructions but did not delve further into this issue.

Issue 3: Whether mining area can be considered part of the cement factory
The report from the Commissionerate questioned whether the mining area could be accepted as part of the cement factory based on legal definitions and court judgments. The Tribunal considered the arguments presented by both sides, including references to relevant case law, and concluded that the mining area did not constitute a "factory" for the purpose of Rule 57Q, aligning with the Revenue's position.

Issue 4: Eligibility of "structurals" for capital goods credit
In Appeal No. E/1123/03, the question arose regarding the eligibility of "structurals" used for supporting a transformer in the factory for capital goods credit. The Tribunal found that the lower appellate authority had denied Modvat credit on different grounds related to the timing of goods receipt, not specifically examining whether the "structurals" qualified as eligible capital goods under Rule 57Q. Consequently, this issue was remanded to the Commissioner (Appeals) for a fresh decision in accordance with the law and principles of natural justice.

In conclusion, the Tribunal dismissed Appeal Nos. E/1116, 1117, 1124, and 1125 concerning the eligibility of capital goods in the mining area for Modvat credit. However, Appeal No. E/1123 was allowed by remand in respect of "structurals" and dismissed in respect of other items, including capital goods used in mines, for reasons stated in other appeals.