2007 (1) TMI 15 - AT - Central Excise

Cenvat/Modvat Alleged that appellant is not entitle for modvat credit on inputs used in the foundation for machinery and also on the capital goods Authority decided that credit admissible except in the cases where invoice not available

Summary

Issues: Disallowance of modvat credit on steel, cement, and chemicals used in the foundation for machinery; Disallowance of credit in respect of other capital goods due to improper format of invoices and lack of duty paying documents.

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, the issue at hand was the disallowance of modvat credit amounting to Rs.78,68,382/- on steel, cement, and chemicals utilized in the foundation for machinery, along with the disallowance of credit pertaining to other capital goods. The Commissioner of Central Excise (Appeals) had disallowed the credit on the grounds that the invoices were not in the correct format and lacked duty paying documents for certain capital goods.

Upon hearing both sides, the Tribunal acknowledged that the cement and steel were essential for creating foundations for heavy machinery and equipment crucial for manufacturing activities. Referring to previous decisions, the Tribunal emphasized that capital goods credit under Rule 57Q was permissible for these items. The Tribunal cited its earlier orders in the assessee's case, highlighting that building materials used for constructing plants could qualify as capital goods under Rule 57Q, which has a broader scope than Section 8(3)(b) of the Central Sales Tax Act. Consequently, the Tribunal ruled that cement and steel used in machinery foundations were eligible for capital goods credit under Rule 57Q.

Furthermore, the Tribunal determined that chemicals like Combestra, Garpark, and Nazolex, used in the foundation, also qualified for credit under Rule 57Q based on previous rulings in the assessee's case. Regarding invoices not in the prescribed format, the Tribunal allowed credit where duty payment on received goods used in manufacturing was confirmed. However, credit was deemed inadmissible in cases where invoices were unavailable, as the duty paid nature of goods remained unverified. The Tribunal directed the recomputation and recovery of credit taken without duty paying documents from the assessees.

In conclusion, the appeal was partially allowed by the Tribunal, permitting credit for steel, cement, and chemicals used in machinery foundations under Rule 57Q, while emphasizing the importance of proper documentation and duty payment verification for availing credit on capital goods.