2006 (1) TMI 517 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of Modvat credit on Siliconised Butyl Rubber seat and Asbestos Rope AMP 31.
2. Eligibility of Modvat credit on Automatic Voltage Regulator, CI Plumber Block, HRP Coil, Shape and Section, HR Coil, AMP 32/121, and Transformer of 37.5 K.V.A.

Detailed Analysis:

1. Eligibility of Modvat credit on Siliconised Butyl Rubber seat and Asbestos Rope AMP 31:
The Revenue challenged the Order of the Commissioner (Appeals) for allowing credit on Siliconised Butyl Rubber seat and Asbestos Rope AMP 31, arguing that these items are not covered by the definition of capital goods. The Tribunal referenced the case of Upper Ganges Sugar & Industries Ltd. v. CCE, Meerut, to support their argument. However, it was contended that these items are used for preventing leakage in the pipes and tubes of the sugar mill while sugarcane juice passes from one section of the factory to another, making them accessories of the pipes and tubes and thus covered by the definition of capital goods. The Tribunal upheld the previous decision in the case of M/s. DSM Sugar Mills, Asmoli, and rejected the Revenue's appeal, affirming that these items are eligible for Modvat credit.

2. Eligibility of Modvat credit on Automatic Voltage Regulator, CI Plumber Block, HRP Coil, Shape and Section, HR Coil, AMP 32/121, and Transformer of 37.5 K.V.A.:
- Automatic Voltage Regulator: The Tribunal found that it is used for voltage regulation at different loads on a 1.5 M.V. Turbine, which is essential for running sugarhouse and crystallizers' stirrers to get the final product. It was deemed an accessory of the turbine and eligible for Modvat credit.
- CI Plumber Block: Used in fitting of open gearing of the last mill TRPF to support the gear at both sides for better juice extraction. It was considered a part and accessory of open gearing, making it eligible for Modvat credit.
- HRP Coil: These coils are used in the base frame of Mill No. 3 D.C. Motor. The Tribunal held that these are construction materials and not part, component, or accessory, referencing the case of Nava Bharat Ferro Alloys Ltd. v. CCE, Hyderabad. Therefore, credit on this item was denied.
- Shape and Section: Used to make a platform for Mill No. 3 D.C. motor. The Tribunal determined these items are construction materials and not part or accessory of the motor, thus denying Modvat credit.
- HR Coil: Used for making headstocks of the third mill where mill rollers are fitted for cane crushing. It was deemed an accessory of the mill rollers, making it eligible for Modvat credit.
- AMP 32/121: Used for proper fittings of transient heater in the centrifugal machine to make sugar. These were considered accessories of the centrifugal machine, thus eligible for Modvat credit.
- Transformer of 37.5 K.V.A.: The Commissioner (Appeals) noted the lack of details regarding the role or use of this transformer. The Tribunal upheld the denial of credit due to insufficient information on whether the transformer was used within or outside the plant.

Conclusion:
The Tribunal allowed credit on Automatic Voltage Regulator, CI Plumber Block, HR Coil, and AMP 32/121, while denying credit on HRP Coil, Shape and Section, and Transformer of 37.5 K.V.A. The appeal of the Revenue was rejected, and the appeal of the assessee was partly allowed.