2006 (3) TMI 497 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit on gas cylinders purchased by M/s. J.K. Steel & Alloys Bhavnagar for cutting plates.

Analysis:
1. The case revolved around the eligibility of Modvat credit claimed by M/s. J.K. Steel & Alloys Bhavnagar for purchasing gas cylinders used in cutting plates. The Department contended that the cylinders did not qualify as capital goods under Rule 2 of Cenvat Credit Rules, 2002, thus denying the credit. Both lower authorities upheld this view, leading to the appeal.

2. The appellant's counsel cited a Supreme Court decision in Commissioner of Central Excise, Coimbatore v. Jawahar Mills Ltd., emphasizing the liberal interpretation of what constitutes capital goods under Rule 57Q. However, the judge found that the decision did not support including oxygen gas within the definition of capital goods. Consequently, the appellants were directed to make a pre-deposit of Rs. 30,000 against the confirmed duty of Rs. 98,560 and Rs. 25,000 towards penalty. The compliance deadline was set for May 3, 2006, with further pre-deposit waived and a stay granted upon reporting.

3. The application was disposed of based on the above terms, with the judge's decision reflecting the interpretation of relevant rules and precedents to determine the eligibility of Modvat credit in the specific context of gas cylinders used by the appellant for industrial purposes.