2007 (3) TMI 581 - AT - Central Excise

Summary

Issues involved: Eligibility of Cenvat credit on capital goods, classification of "Plain Plates of Steel" as capital goods.

Eligibility of Cenvat credit on capital goods:
The appeal was filed by the Revenue challenging the eligibility of Cenvat credit on "Plain Plates of Steel" used for fabrication of a chimney of a glass furnace. The adjudicating authority disallowed the Modvat credit, stating that the chimney, being part of an immovable glass furnace, did not qualify as capital goods. However, the Commissioner (Appeals) allowed the appeal, citing a Tribunal's order that credit cannot be denied even if the furnace is immovable, as the chimney is integral for manufacturing finished goods.

Classification of "Plain Plates of Steel" as capital goods:
The Revenue contended that "plain plates of steels" do not fall under the definition of capital goods as per Rule 57Q of Central Excise Rules, 1944, as they are neither machinery nor parts, components, or accessories of any machine. Upon review, it was found that the glass furnace, classified as eligible capital goods, utilized the disputed capital goods in fabricating the chimney. Referring to a Supreme Court case, it was established that if a product is used in or in relation to the manufacture of a final product, it qualifies as capital goods. As the "Plain Plates of Steels" were indeed used in the manufacturing process, the impugned order was upheld, and the Revenue's appeal was rejected.