2006 (2) TMI 546 - AT - Central Excise

Summary

Issues involved: Denial of Modvat credit on various items including channels, welding electrodes, plain plates, HR sheets, angles, lubricants, base frame, and chemicals.

Channels, Plain Plates, HR Sheets, Angles: The appellant argued that previous Tribunal orders and an Apex Court decision supported the eligibility of these items for Modvat credit. Reference was made to the case of Simbhaoli Sugar Mills Ltd. v. CCE. The Tribunal had allowed credit on these items previously. Regarding lubricants, it was highlighted that a larger Bench decision in CCE v. Modi Rubber Ltd. had established their eligibility for credit. The chemicals were acknowledged to be essential inputs for sugar production. The claim for welding electrodes was not pursued by the appellant.

Steel Sheets as Inputs: The respondent cited the case of Gangeswhar Ltd. v. CCE, Meerut, where it was held that steel sheets used in sugar manufacturing are inputs, not capital goods. A similar decision was noted in Max G.B. Limited v. CCE, Chandigarh.

Decision: Despite conflicting Tribunal decisions on certain items, the rejection of the Revenue's appeal by the Apex Court in Simbhaoli Sugar Mills Ltd. v. CCE supported the appellant's claim. The issue of lubricants was also in favor of the appellant based on a previous decision. The eligibility of chemicals for credit was not disputed due to their essential role in sugar purification. Consequently, credit denial for welding electrodes was upheld, while denial for other items was overturned. The appeal was partly allowed, with the appellant entitled to any consequential relief.

*(Pronounced in court)*