2005 (8) TMI 561 - AT - Central Excise

Summary

Issues:
1. Determination of whether "Steel Shots" are considered capital items under Rule 57Q.

Analysis:
The appeal was admitted under the second proviso of Section 35B of the Central Excise Act, 1944, as a connected appeal was already registered. The main issue in this case revolved around whether "Steel Shots" should be classified as capital goods under Rule 57Q or not. The show cause notice alleged that the proper declaration was not filed regarding the status of "Steel Shots." The appellant argued that the "Steel Shots" were used for cleaning castings and could avail duty under Rule 57A, not Rule 57Q. However, the Assistant Commissioner found that the "Steel Shots" were consumed during the cleaning process and did not qualify as capital goods under Rule 57Q. Consequently, Modvat credit of Rs. 72,000 was disallowed, and interest was levied at 20% per annum under Section 11AA of the Central Excise Act, 1944.

The Commissioner of Central Excise (Appeals), Mumbai, upheld the Order-in-Original, leading the appellant to file an appeal before the Tribunal. During the hearing, it was noted that the issue was addressed in favor of the appellant in a previous case, CCE, Kanpur v. Bharat Industries. The decision in this case established that if "Steel Shots" were used in relation to the manufacture of final products, Modvat credit was admissible regardless of their classification as capital goods under Rules 57A and 57Q of the Central Excise Rules, 1944. Therefore, based on the established legal position, the Tribunal allowed the appeal, setting aside the orders of the lower authorities.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant based on the precedent set in the case of CCE, Kanpur v. Bharat Industries. The decision clarified that the admissibility of Modvat credit for "Steel Shots" was not contingent on their classification as capital goods under the Central Excise Rules, 1944.