2006 (1) TMI 504 - AT - Central Excise

Summary

Issues:
1. Whether Gas scrubbers and Spare packed bed for scrubber imported by the respondents qualify as capital goods for availing Modvat credit.
2. Whether the goods imported by the respondents fall under Chapter 38 or Chapter 84 for the purpose of availing credit.

Comprehensive Analysis:
Issue 1: The appeal challenged the Order-in-Appeal that allowed the respondents' appeal regarding the denial of Modvat credit on Gas scrubbers and Spare packed bed for scrubber. The respondents claimed these items as capital goods, while the department argued they were chemical media not falling under the capital goods category. The Commissioner (Appeals) concluded that the products fell under Heading No. 84.21 and qualified as capital goods. The department contended that the items were under Chapter 38 and not eligible for credit. However, the Tribunal found that the goods were used with D.G. sets, meeting the definition of capital goods, and thus eligible for Modvat credit.

Issue 2: The department argued that the goods imported by the respondents were chemical media falling under Chapter 38, not Chapter 84. The Tribunal examined the specific items involved, including Purafil scrubber and spare packed bed for scrubber, to determine their classification. The Tribunal noted that the goods were used for separating impurities from intake air in D.G. sets, supporting their categorization as capital goods under Heading No. 84.21. The Tribunal referred to the definition of capital goods during the relevant period, emphasizing that components, spares, and accessories used with specified goods were eligible for credit, which applied to the items in question.

In conclusion, the Tribunal dismissed the department's appeal, affirming that the Gas scrubbers and Spare packed bed for scrubber imported by the respondents qualified as capital goods for availing Modvat credit. The judgment highlighted the importance of the specific use of the goods in the manufacturing process and their alignment with the definition of capital goods under the relevant rules and classifications.