2005 (11) TMI 321 - AT - Central Excise

Summary

Issues: Denial of capital goods credit for flexible mounting and flexible connector as accessories for captive power plant.

In this case, the Appellate Tribunal CESTAT, CHENNAI, dealt with the denial of capital goods credit to the assessee for two items, namely flexible mounting and flexible connector, claimed as accessories for their captive power plant. The lower appellate authority had rejected the claim, stating that these items were structurals used for visual inspection and not components or accessories of the power plant. However, upon examination, the Tribunal found that the flexible mounting, a hardened rubber pad, offered significant service life and was essential for absorbing transverse vibrations of the Diesel Generating sets (DG sets) in the power plant, preventing undesirable results. The Tribunal noted that the captive power plant was eligible for capital goods credit, and as the rubber pads were crucial for the continuous operation of the DG sets, they should be considered as capital goods. The Tribunal emphasized that the flexible mounting was indeed an accessory to the power plant, making it eligible for capital goods credit under the relevant rule.

Furthermore, the Tribunal considered the flexible connectors used as fittings to the DG sets to ensure the continuous operation of the power plant without breakdown due to transverse vibrations and torque. It was evident that these connectors played a vital role as accessories to the power plant, thereby qualifying for capital goods credit. Consequently, the impugned order denying capital goods credit for the flexible mounting and flexible connector was set aside, and the appeal of the assessee was allowed. The judgment highlighted the importance of recognizing essential components and accessories of a power plant as eligible for capital goods credit, ensuring the smooth functioning and maintenance of such industrial setups.