2006 (3) TMI 471 - AT - Central Excise

Summary

Issues:
1. Eligibility of components, spares, and accessories for Modvat credit as capital goods.
2. Interpretation of Rule 57Q (a) excluding goods falling under Chapter 84.31 from the definition of capital goods.
3. Application of Board's Circular regarding the benefit of credit to components, spares, and accessories of specified capital goods irrespective of their classification.

Analysis:

1. The judgment deals with Revenue Appeals challenging the Orders-in-Appeal regarding the eligibility of components, spares, and accessories, specifically Un-machined Steel Lining Plates and Un-machined Steel Castings used in Coal Mill for the manufacture of cement, for Modvat credit as capital goods. The Commissioner relied on the Apex Court judgment in Jawahar Mills Ltd. v. CCE, which also applied to Highchrome Grinding Media and Conveyor Rollers as capital goods. The Tribunal upheld the Commissioner's decision based on the Apex Court judgment and Board's Circular.

2. The Revenue contended that goods falling under Chapter 84.31 are excluded from the definition of capital goods as per Rule 57Q (a), which the Commissioner allegedly overlooked. However, the Tribunal noted that the coal mill and cement mill were not excluded as capital goods under the cited Board's Circular. Even though the named components were in the exclusion clause of Rule 57Q (a), they were used with eligible capital goods. Therefore, the Tribunal concluded that the benefit cannot be denied based on the Apex Court judgment and the Board's Circular.

3. The learned Counsel referred to Board's Circular No. 276/110/96-TRU, emphasizing that the benefit of credit should be granted to components, spares, and accessories of specified capital goods regardless of their classification. The Counsel argued that since the capital goods were covered and eligible for benefit, the items in question should also be eligible. The Tribunal agreed with this interpretation, stating that if the coal mill and cement mill were ineligible as capital goods, then the items would be excluded from the benefit. Ultimately, the Tribunal found no infirmity in the impugned order and dismissed the appeals based on the reasons given by the Commissioner, the Apex Court judgment, and the Board's Circular.

This detailed analysis of the judgment highlights the issues of eligibility for Modvat credit, interpretation of statutory provisions, and the application of relevant circulars and judicial precedents in determining the entitlement of components, spares, and accessories as capital goods.