2008 (12) TMI 566 - AT - Central Excise

Summary

Issues involved: Eligibility of Modvat credit on capital goods.

Summary:
The appeals were filed against three orders of the Commissioner (Appeals) regarding the eligibility of Modvat credit on capital goods. The learned CA argued that the review petitions filed by the department were not maintainable as per Section 35E(2) since the Commissioner directed the wrong authority to file an appeal. On merits, it was contended that components undergoing further machining should still be eligible for Modvat credit. The CA also argued that even if the main machine is eligible, the components, spares, and accessories should also be eligible. The Commissioner (Appeals) disallowed credit on some items stating they were raw materials and not directly usable as parts or spares. The CA argued that even if not considered capital goods, credit should be allowed as raw materials based on a decision of the Tribunal.

On the other hand, the SDR argued that the Commissioner (Appeals) order was legal and proper based on the instructions issued by the Board. The SDR supported the Commissioner (Appeals) decision on other issues as well.

The Tribunal found no merit in the contention regarding the maintainability of the appeals based on the definitions of officers. It was noted that the directions were issued to the wrong officer, making the appeal not maintainable. The Tribunal agreed with the CA's argument that further machining should not render components ineligible for credit. It was also held that irrespective of the classification of components, credit would be admissible if the main machine is eligible. The Tribunal allowed the appeals filed by the appellants based on these findings.

In conclusion, the appeals were allowed on merits, and the decision was pronounced in court on 11-12-2008.