2006 (5) TMI 402 - AT - Central Excise

Cenvat/Modvat - Capital goods - Construction materials - M.S. Plates, M.S. Angles, M.S. Channels, Aluminium Sheets, Ceramic Blankets, Nuts and Bolts, Laping Paste, Graf Seal Tapes - to be considered as parts, components, accessories of capital goods as per the definition of the capital goods under Rule 57Q of the erstwhile Central Excise Rules, 1944 or not - ceramic blankets - Nuts Bolts - HELD THAT - The appellants in their own case have been allowed the Modvat credit in respect of M.S. Plates, angles, channels, aluminium sheets in the decisions of CEGAT cited supra which has followed the decision CEGAT in the SIMBHAOLI SUGAR MILLS LTD. VERSUS COMMISSIONER OF C. EX., MEERUT 2000 (2) TMI 173 - CEGAT, NEW DELHI which was upheld by the Supreme Court. The above decision make it clear that credit cannot be denied on the ground that the inputs are construction materials unless it is held that inputs are used for civil construction and are not part of plant and machinery not used for raising structure to support various machine parts of the machine - It therefore appears that it is not department s case that the inputs were used for civil construction and therefore following the above decision, I allow the credit in respect of M.S. Plates, Angles, channels, aluminium sheets etc. Credit on ceramic blankets - HELD THAT - The Commissioner (Appeals) has admitted that they are used as insulating material and therefore following the CEGAT decision in the case of COLLECTOR OF C. EX., CHANDIGARH VERSUS GUJARAT AMBUJA CEMENT LTD. 1999 (11) TMI 183 - CEGAT, NEW DELHI , I hold that the credit on the same will be admissible. Nuts Bolts - HELD THAT - Since the same are used for assembling the various parts and components of machinery the same are held to be entitled to Modvat credit. Appeal allowed.

Summary

Issues:
Denial of Modvat credit on various items under Rule 57Q of Central Excise Rules, 1944.

Analysis:
The appellants were denied Modvat credit on items like M.S. Plates, M.S. Angles, M.S. Channels, Aluminium Sheets, Ceramic Blankets, Nuts and Bolts, Laping Paste, and Graf Seal Tapes totaling Rs. 1,93,877.79. The denial was based on the argument that these items did not qualify as parts, components, or accessories of capital goods as per the definition under Rule 57Q of the Central Excise Rules, 1944.

The learned Advocate for the appellants argued that previous CESTAT decisions had allowed credit on similar items, citing specific order numbers and relying on the decision of CEGAT in a relevant case upheld by the Apex Court. For instance, the Tribunal had previously allowed credit on items like aluminium sheets used for manufacturing plants and ceramic blankets considered as insulating material. The Advocate contended that items like Nuts & Bolts were essential for assembling plant components, making them eligible for credit. However, they did not pursue credit for laping paste and graf seal tape.

The Tribunal examined the submissions and noted that previous decisions had allowed Modvat credit on similar items based on specific usage criteria. The Tribunal emphasized that the denial of credit should not be solely based on items being construction materials unless they were used for civil construction and not as part of plant machinery. Since the lower authorities did not prove that the inputs were used for civil construction, the Tribunal allowed credit for items like M.S. Plates, Angles, Channels, and Aluminium Sheets.

Regarding ceramic blankets, the Tribunal acknowledged their use as insulating material, following a CEGAT decision, and deemed them eligible for credit. Similarly, Nuts & Bolts were considered part of machinery components, justifying their entitlement to Modvat credit.

Ultimately, the Tribunal disallowed credit for laping paste and graf seal tape, as the appellants did not pursue credit for these items. The appeal was allowed in favor of the appellants, granting credit for eligible items as per the detailed analysis and precedents cited.