2005 (11) TMI 348 - AT - Central Excise

Summary

Issues: Eligibility of Modvat/Cenvat credit for M.S. Plates used for repairs and maintenance of machinery under Rule 57Q.

Analysis:
The judgment revolves around the eligibility of Modvat/Cenvat credit for M.S. Plates used in repairing and maintaining machinery. The dispute arises from the classification of the M.S. Plates under Chapter 72 of the Central Excise Tariff Act, 1985, and whether they qualify as capital goods under Rule 57AA of the Cenvat Rules. The Revenue argues that since the plates are classifiable under Chapter 72, they are not eligible for credit, while the assessee contends that as the plates are used as components of machinery classified under Heading 84.74, they are entitled to the credit.

The Tribunal refers to previous decisions in similar cases, such as J.K. Cement Works and Rosa Sugar Works, where it was held that plates used for repairing machinery parts qualify as eligible capital goods for Modvat credit. The Revenue relies on larger bench decisions like Jaypee Rewa Plant and Triveni Engg. & Industries Ltd. to argue that items used for repairs and maintenance do not qualify for capital goods credit. However, the Tribunal finds that components, spares, and accessories of capital goods have always been eligible for Modvat/Cenvat credit, regardless of whether they are used for repairs or maintenance.

The Tribunal emphasizes that the term "spares" in the Rules implies the provision for replacing existing machinery components, supporting the view that repairs and maintenance are covered under the law. It distinguishes items like welding electrodes and gases, which are consumed during repairs and do not become part of the machinery, from M.S. Plates used for repairs. The Tribunal concludes that the reliance on larger bench decisions by the Revenue is misplaced in this context, as the facts of the case are different.

Another ground raised is the pendency of a civil appeal by the department against a previous Tribunal order allowing credit on similar items used for machinery repairs. The Tribunal clarifies that the mere pendency of an appeal does not impact the precedent value of its decision. Consequently, the appeal of the Revenue is dismissed, affirming the eligibility of Modvat/Cenvat credit for M.S. Plates used in machinery repairs.