2011 (11) TMI 621 - AT - Central Excise

Summary

Issues involved:
Identification of modvatable capital goods in the context of old and used SS plates used in the lining of a furnace.

Analysis:
The judgment pertains to three stay petitions with a total duty involved amounting to &8377; 51,682. The central issue revolves around determining whether the old and used SS plates, procured by the appellants for lining a furnace, qualify as modvatable capital goods. The lower authorities disallowed the credit citing that goods of Chapter 72 are excluded from the definition of capital goods under Rule 2(a)(A) of the Cenvat Credit Rules, 2004. However, the appellants argue that the plates should be considered parts of the furnace under Rule 2(a)(A)(iii) of the same rules. They rely on the judgment of the Hon'ble Rajasthan High Court and a Tribunal decision to support their stance. The Rajasthan High Court case established that steel plates used in workshops for machinery repair, subsequently used in manufacturing final products, are eligible for modvat credit as capital goods. Similarly, the Tribunal's decision in another case rejected the Revenue's objection, affirming that plates used as components, spares, or accessories of machinery eligible for modvat credit should be deemed eligible capital goods. In this scenario, where the plates are consumed during furnace use and fall under Chapter 72, they qualify as components, spares, or accessories of the furnace under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004. Consequently, the judgment rules in favor of the appellants, setting aside the impugned order and granting them relief without the need for pre-deposit of duty and penalty. The stay petitions and appeals are thus resolved accordingly.