2007 (8) TMI 574 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit on specific items by lower authorities.

Summary:
The appellants, cement manufacturers, had taken Modvat credit on items including a truck loading machine, HB Chart, and a calibrator during a certain period. The lower authorities disallowed the credit on these items and ordered recovery of a specific amount. Upon examination, it was noted that the credit was taken during the early stage of the capital goods credit scheme when the definition of "capital goods" included various equipment used in production processes.

Regarding the truck loading machine, it was argued that it was integrally connected to the automatic packing machine and played a crucial role in the final stage of cement manufacture. However, as the truck loading machine and the wagon loading machine functioned similarly and the latter was not claimed for credit, the appellants could not claim the benefit for the former. Since both machines were used post-manufacture, they did not fall under the category eligible for Modvat credit as per the definition of capital goods.

On the other hand, the HB Chart, which monitored and recorded plant functions for cement production control, and the calibrator, which calibrated pressure in machineries during operation, were found to be directly involved in the manufacturing process. Therefore, it was concluded that capital goods credit was admissible for the HB Chart and Calibrator.

In conclusion, the appeal was allowed only for granting capital goods credit on the HB Chart and Calibrator, modifying the impugned order accordingly.