2005 (9) TMI 562 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit for UV lamps/bulbs and set spring sprue bush.
2. Interpretation of Rule 57Q of the Tariff Rules.
3. Applicability of Board's Circular dated 2-12-96.
4. Determination of Modvat credit for components used in capital goods.

Analysis:

Issue 1: Eligibility of Modvat credit for UV lamps/bulbs and set spring sprue bush
In Appeal No. E/594/2004, the appellant claimed Modvat credit for UV Lamps and set spring sprue bushes used as parts of capital goods. The Deputy Commissioner disallowed the credit, leading to a penalty. However, the Commissioner (Appeals) allowed the appeals based on the Board's Circular dated 2-12-96, stating that Modvat credit was admissible for these items as components of capital goods.

Issue 2: Interpretation of Rule 57Q of the Tariff Rules
Rule 57Q(1) specified the goods eligible for Modvat credit, including components, spares, and accessories of capital goods. The Deputy Commissioner excluded UV Lamps and set spring sprue bushes from Modvat credit due to specific exclusions in the Table. However, the Commissioner (Appeals) held that the items were eligible as component parts of capital goods, as per the Circular.

Issue 3: Applicability of Board's Circular dated 2-12-96
The Board's Circular clarified that parts, components, and accessories used with capital goods are eligible for Modvat credit. The Commissioner (Appeals) relied on this Circular to allow Modvat credit for UV bulbs and set spring sprue bushes, emphasizing their use as components of capital goods.

Issue 4: Determination of Modvat credit for components used in capital goods
The Tribunal emphasized that Modvat credit cannot be denied based on the exclusion of parts from the list of capital goods. As long as components are used in or with any capital goods falling under specified categories, they are eligible for Modvat credit. Therefore, the Tribunal dismissed the appeals, upholding the Commissioner (Appeals) decision to allow Modvat credit for UV bulbs and set spring sprue bushes as component parts of capital goods.

In conclusion, the judgment clarified the eligibility of Modvat credit for components used in capital goods, emphasizing the application of Rule 57Q and the relevance of the Board's Circular in determining such eligibility.