2013 (4) TMI 708 - HC - Central Excise

Denial of MODVAT Credit - Capital Goods - Held that - Subject eight items are the components of the capital goods and an assessee is entitled to claim Modvat credit in respect of the components of the capital goods. - there is no merit in the appeal. Both the substantial questions of law are decided against the Department - Decided against Revenue.

Summary

Issues:
Claim of Modvat credit for capital goods by the Assessee, Disallowance of Modvat credit by the Department, Appeal allowed by Commissioner (Appeals), Department's appeal before Tribunal, Questions of law framed by the Department, Admittance of appeal, Dispute over eight specific items, Entitlement to claim Modvat credit for components of capital goods.

Analysis:
The case involved the Assessee claiming Modvat credit for certain items as capital goods. The Department issued notices questioning the credit claimed, leading to objections from the Assessee. The Assistant Commissioner disallowed the credit initially, but the Commissioner (Appeals) later allowed the appeal in favor of the Assessee for all 47 items. Subsequently, the Department filed an appeal before the Tribunal regarding only 8 items, which was dismissed, prompting the present appeal.

The Department framed two substantial questions of law for the appeal, questioning the interpretation of the Tribunal's earlier decision and the classification of items as "Capital Goods" under the Central Excise Rules. The appeal was admitted based on these questions, and the Court heard arguments from both parties.

The specific eight items in question were listed, and it was acknowledged that these items were components of capital goods, entitling the Assessee to claim Modvat credit for them. Consequently, the Court found no merit in the appeal, ruling against the Department on both substantial questions of law. As a result, the appeal was dismissed, affirming the entitlement of the Assessee to claim Modvat credit for the components of capital goods.

In conclusion, the judgment upheld the Assessee's right to claim Modvat credit for the specified items as components of capital goods, rejecting the Department's appeal and affirming the decision in favor of the Assessee.