2006 (7) TMI 547 - AT - Central Excise

Summary

Issues:
Appeal against allowing Modvat credit on Electro Static Powder Coating Outfit under Chapter heading No. 8423.80.

Analysis:
The appeal was filed by the Revenue challenging the order-in-appeal that permitted the appellants to avail Modvat credit. The dispute revolved around the eligibility of Modvat credit on Electro Static Powder Coating Outfit under Chapter heading No. 8423.80. The Revenue contended that this specific sub-heading was excluded from availing the credit under Rule 57Q of the Central Excise Rules, 1944. The adjudicating authority upheld the demand and imposed a penalty, which was later overturned by the Commissioner (Appeals).

The learned DR argued that the specific Chapter heading was excluded from Modvat credit eligibility concerning capital goods. On the other hand, the advocate for the respondents contended that the exclusion clause only applied to sub-heading 5424.80 if the items were fire extinguishers. It was clarified that the electrostatic powder coating outfit was not a fire extinguisher but a machinery used in the manufacturing process.

After considering the arguments from both sides and reviewing the records, it was established that the appellants had indeed availed Modvat credit on the electrostatic powder-coating outfit falling under heading 8424.80. Rule 57Q during the relevant period specified that the clause 8424.80 pertained to fire extinguishers within that Chapter heading. Since it was undisputed that the electrostatic powder-coating outfit was utilized as machinery and not as a fire extinguisher, the Tribunal found no grounds to deny the Modvat credit to the respondents. Consequently, the Tribunal upheld the order-in-appeal, dismissing the appeal filed by the Revenue.

The judgment was pronounced on 25-7-2006 by Shri M.V. Ravindran, J., in the Appellate Tribunal CESTAT, New Delhi, citing the case as 2006 (7) TMI 547.