2006 (2) TMI 524 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit on refractory materials.
2. Eligibility of electric motor for Modvat credit.

Analysis:

Issue 1: Eligibility of Modvat credit on refractory materials:
The Revenue's appeal was against the claim of Modvat credit on refractory materials used by the assessee, which were classified under Chapter 38 instead of Chapter 69 as specified for Modvat credit. The Revenue contended that since the classification did not match the Rule, credit was not available. However, the assessee argued that previous Tribunal decisions had ruled in favor of eligibility for Modvat credit for refractory materials, regardless of classification. The Tribunal referred to cases like J.K. Udaipur Udyog Ltd. and Associated Cement Co. Ltd., where it was held that certain refractory materials were eligible for credit. Therefore, the Revenue's appeal was rejected based on the precedent set by previous Tribunal decisions.

Issue 2: Eligibility of electric motor for Modvat credit:
In the appeal filed by the assessee, the dispute was regarding the eligibility of an electric motor for Modvat credit. The credit was denied because the supplier's invoice mentioned two units, and the credit was taken in the name of one unit, not the assessee. The assessee argued that the mention of two units was an inadvertent error by the supplier and should not be a reason to deny credit. They relied on the Tribunal's decision in the case of Snow Cem India Ltd., stating that errors in mentioning units should not affect credit eligibility for a multi-factory company. The Revenue, however, cited the Dewas Metals Section Ltd. case where credit was denied due to invoices being in the name of a party other than the one claiming credit. The Tribunal found that the invoices in question clearly indicated the unit claiming credit, and there was no dispute about the receipt of goods and eligibility. Considering the similarity of the buyer and the claiming unit, the denial of credit was deemed unjustified, and the appeal was allowed in favor of the assessee.

In conclusion, both appeals were disposed of with the Revenue's appeal on refractory materials being rejected based on precedent, and the assessee's appeal on the electric motor being allowed due to the inadvertent error in the supplier's invoice.