2006 (3) TMI 538 - AT - Central Excise

Summary

Issues:
1. Whether ducts and structurals of steel should be considered as part of plant and machinery required for manufacturing cement and entitled to Modvat credit.
2. Whether ducts and structurals are eligible for Modvat credit despite being classifiable under a specific sub-heading at nil rate.
3. Comparison with similar cases regarding the classification of items as capital goods for Modvat credit eligibility.

Analysis:
1. The Commissioner, after examination, held that ducts and structurals of steel used in cement manufacturing should be considered part of plant and machinery, eligible for Modvat credit under Rule 57Q. This decision was based on the judgment in CCE v. Jawahar Mills Ltd. The Appellate Tribunal upheld this view, emphasizing that these items were indeed used for manufacturing capital goods, making them eligible for Modvat credit.

2. The Revenue argued that the items cannot be classified as capital goods for Modvat credit since they fall under a specific sub-heading at nil rate, requiring reversal under Rule 5 of C.E. Rules. However, the Tribunal disagreed, noting that the specific classification did not preclude the items from being considered as part of the capital goods required for the manufacturing process. The Tribunal supported its decision by referencing relevant case law and rulings.

3. The Counsel for the Respondent cited similar cases where items like MS tubes, pipes, HR sheets, angles, channels, joists, etc., were deemed as capital goods for Modvat credit eligibility. These cases provided precedents for considering structural components used in various manufacturing processes as integral to the production of capital goods. The Tribunal found these comparisons compelling and aligned with the Commissioner's decision based on the Apex Court judgment and other relevant rulings.

In conclusion, the Tribunal affirmed the Commissioner's decision, emphasizing that the ducts and structurals of steel were rightly treated as part of the plant and machinery necessary for manufacturing capital goods, entitling them to Modvat credit. The Tribunal found no merit in the Revenue's appeal and rejected it, citing consistency with established legal principles and precedents.