2006 (3) TMI 573 - AT - Central Excise

Summary

Issues: Modvat credit eligibility for control transformers, inverters, hydraulic oil, and air-conditioners in the manufacture of excisable lift parts; conflicting views on the eligibility of air conditioners for Modvat credit.

Issue 1: Modvat credit eligibility for control transformers, inverters, hydraulic oil in the manufacture of excisable lift parts:

The appellant, a manufacturer of parts and sub-assemblies for lifts, claimed Modvat credit for control transformers, inverters, hydraulic oil, and air-conditioners. All items except air conditioners were found to be directly used in the manufacture of excisable lift parts, and their value was included in the assessable value of the said lift parts. The Commissioner held these items eligible for Modvat credit, finding no error or illegality in that order.

Issue 2: Conflicting views on the eligibility of air conditioners for Modvat credit:

Regarding air conditioners, the appellant argued that they were necessary for providing the required atmospheric conditions for the CNC-based Amada Turrent Punch machine in the factory, which could only operate at a low temperature. Citing a precedent where air-conditioners used in the manufacture of satellite terminators were deemed eligible for Modvat credit, the appellant sought a similar treatment. However, the JDR referred to a different case where air conditioners falling under a specific category were excluded from the definition of capital goods, making Modvat credit inadmissible. Due to conflicting views on the eligibility of air conditioners, the matter was directed to be placed before a Larger Bench of the Tribunal for resolution.

In conclusion, the judgment addressed the Modvat credit eligibility for various items used in the manufacture of excisable lift parts, with a specific focus on the disputed eligibility of air conditioners. The decision highlighted the importance of resolving conflicting views through a Larger Bench of the Tribunal to ensure consistency and clarity in the application of Modvat credit rules.