2007 (2) TMI 540 - AT - Central Excise

Summary

Issues involved:
1. Eligibility of Modvat credit on chlorine tonners as capital goods.
2. Modvatability on inputs like paper tube and antistatic oil in the manufacture of texturised yarn.

Eligibility of Modvat credit on chlorine tonners:
The issue in the appeals against M/s. Mangalam Rasayan P. Ltd. and Mangalam Polysters Ltd. revolved around whether chlorine tonners, serving as storage containers/cylinders, qualify as Modvatable capital goods. The Commissioner (Appeals) upheld the adjudicating authority's decision allowing Modvat credit on the chlorine tonners. The Board clarified that components, spares, and accessories used in plant and machinery are eligible for Modvat credit. However, it was argued that the tonners were not essential parts of the reactor machinery where the reaction takes place. The Revenue failed to provide logical evidence against allowing Modvat credit on the chlorine tonners. The issue had been previously settled by a Larger Bench decision of the Tribunal in the case of Jawahar Mills, affirmed by the Supreme Court. Consequently, the appeals by the Revenue were deemed meritless and rejected.

Modvatability on inputs for texturised yarn:
In the case of Velson Polyesters Ltd. and Dhanlaxmi Mills, the appeals pertained to the Modvatability of inputs such as paper tube and antistatic oil used in manufacturing texturised yarn. The Revenue contended that since the yarn was taxable based on the Government-fixed tariff value, the cost of the packaging materials should not be considered in the assessable value of the final product, thus disallowing the credit. A similar issue had been addressed by the Tribunal in a previous order involving CCE, Surat v. Dhanlaxmi Paper Mills, where the Revenue's appeal was rejected. Given the precedent, the appeals filed by the Revenue concerning these respondents were also dismissed. In summary, all appeals brought by the Revenue were rejected.