2009 (4) TMI 674 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on items due to discrepancy in description.
2. Denial of Modvat credit on Plates, Angles, and Channels as not capital goods.

Analysis:
1. The appeal was taken up for de novo decision following the order of the Hon'ble Rajasthan High Court regarding the denial of Modvat credit on certain items. The Asstt. Commissioner disallowed Modvat credit on various items, including Load Cells, Spares for Pump, and Liner Plates, due to discrepancies in their description as per invoices and declarations under Rule 57T. The Commissioner (Appeals) allowed credit on all items except Plates, Angles, and Channels. The Appellant contended that discrepancies in descriptions should not lead to credit denial, citing relevant judgments. The Tribunal dismissed the appeal, leading to the High Court remanding the matter for a fresh decision, resulting in the current de novo consideration.

2. The Appellant argued that Plates, Angles, and Channels are integral parts of machinery, eligible for Modvat credit. They highlighted that these items are used as spares for machinery, relying on previous judgments emphasizing the definition of capital goods. The Appellant's position was supported by judgments from the Hon'ble Punjab & Haryana High Court and the Hon'ble Rajasthan High Court. In contrast, the Ld. DR supported the denial of Cenvat credit based on the items not being considered parts of machinery for finished goods manufacture. However, the Tribunal found in favor of the Appellant, stating that discrepancies in descriptions should not warrant credit denial and that Plates, Angles, and Channels indeed qualify as capital goods. The Tribunal set aside the denial of Modvat credit on these items, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the Appellant, allowing Modvat credit on Load Cells, Spares for Pump, Liner Plates, Plates, Angles, and Channels. The decision was based on the findings that discrepancies in descriptions should not lead to credit denial and that the latter items were deemed integral parts of machinery, qualifying for capital goods status.