2006 (7) TMI 455 - AT - Central Excise

Summary

Issues:
Appeal against order allowing Modvat credit for duty paid on parts used in manufacturing chilling plants - Eligibility of Modvat credit under Rule 57Q - Exclusion of parts under chapter heading No. 84.15 from capital goods definition.

Analysis:
The appeal concerned the Modvat credit availed by the respondent on parts used in manufacturing chilling plants in their factory from July 1996 to March 2001. The lower authorities issued a show cause notice alleging inadmissibility of the credit under Rule 57Q. The adjudicating authority confirmed the demand, stating the parts fell under chapter heading No. 84.15 and were excluded from capital goods. The Commissioner (Appeals) later allowed the appeal, leading to the current appeal by the Revenue.

The Revenue contended that the parts of the chilling plant fell under chapter heading No. 84.15, excluding them from capital goods, regardless of their necessity for manufacturing final products. On the other hand, the respondent argued that since the chilling plant was essential for their final products, the credit should not be denied. The respondent's Advocate cited various case laws to support this argument.

Upon consideration, the Tribunal found that the parts on which Modvat credit was availed did indeed fall under chapter heading No. 84.15. Referring to Rule 57Q, the Tribunal noted that the exclusion of machinery under this chapter heading prevented the respondent from availing the Modvat credit, despite the necessity of the parts for manufacturing final products. The Tribunal emphasized that the case laws cited by the respondent's Advocate pertained to a different period when the definition of capital goods under Rule 57Q was distinct. Consequently, the Tribunal set aside the impugned order and allowed the Revenue's appeal.

In conclusion, the Tribunal ruled that the respondent was not eligible to avail the Modvat credit on parts of the chilling plant falling under chapter heading No. 84.15, as per the provisions of Rule 57Q. The decision highlighted the specific exclusion of machinery under this chapter heading from the definition of capital goods, emphasizing the legislative intent behind the rule.