2009 (1) TMI 710 - AT - Central Excise

Summary

Issues:
Whether appellant is eligible for credit of duty paid on a personal computer used for designing and drawing components in manufacturing process.

Detailed Analysis:

Issue 1: Eligibility for Modvat credit on personal computer
The appellant availed Modvat credit on a personal computer used for designing components, which the revenue deemed irregular as the computer was not directly involved in manufacturing final products. The Adjudicating Authority and Commissioner (A) upheld the denial of credit. The appellant argued the computer's integral role in production, citing Tribunal and Supreme Court judgments supporting their claim. The computer was used for designing components, storing manufacturing processes, and transmitting data to CNC machines, supporting manufacturing activities. The Tribunal analyzed Rule 57Q of Central Excise Rules, which defines capital goods broadly to include items used for producing goods. The Supreme Court precedent confirmed that capital goods encompass those used in manufacturing processes, qualifying for Modvat credit. Previous Tribunal decisions also supported the eligibility of personal computers used for designing components as capital goods. Consequently, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the computer's role in the production process.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that the personal computer used for designing components and supporting manufacturing activities qualifies as a capital good eligible for Modvat credit. The decision was based on the broad definition of capital goods under Rule 57Q and supported by previous Tribunal judgments and a Supreme Court precedent.