2008 (10) TMI 363 - HC - Central Excise

Cenvat Credit on parts, components and accessories of D.C. Sets - accessories of capital goods - Modvat credit is admissible on the components of Diesel Generating Power Plant (DGPP) installed in a factory when the DGPPs are exempted from payment of duty Held that - questions of law are decided against the Revenue and in favour of the Manufacturers. No order as to costs.

Summary

Issues:
1. Interpretation of Rule 57T(7) of the Central Excise Rules, 1944 regarding manufacturer's benefit.
2. Eligibility for Modvat credit under Rule 57Q on components of Diesel Generating Power Plant (DGPP).
3. Consideration of DGPP as a capital good for Modvat credit purposes.

Analysis:
1. The first issue revolves around the Tribunal's decision to grant benefit under Rule 57T(7) to a company for assembling D.C. Sets despite the manufacturer being different as per the purchase order. The Court examined whether the Tribunal's decision was correct in light of the specific circumstances and the actual manufacturer of the D.C. Sets. The judgment scrutinized the applicability of the rule and the implications of manufacturer identification in such cases.

2. The second issue delves into the admissibility of Modvat credit under Rule 57Q on components of the DGPP, which is exempt from duty payment. The Court analyzed whether the manufacturer could claim credit for duty paid on components of the DGPP, even though the final product was duty-exempt. The judgment emphasized the relevance of Rule 57Q in claiming Modvat credit on capital goods and the components thereof, despite the final product's duty exemption status.

3. Lastly, the Court considered whether the DGPP should be treated as a capital good for the purpose of claiming Modvat credit. The judgment highlighted the importance of categorizing the DGPP as a capital good and its integral role in the manufacturing process. By referencing precedents and decisions from other courts, the judgment supported the manufacturers' entitlement to claim Modvat credit on duty paid components of the DGPP. The Court's decision aligned with previous rulings in favor of manufacturers, emphasizing the capital nature of the DGPP and the validity of claiming Modvat credit in such scenarios.

In conclusion, the judgment dismissed the petition, ruling in favor of the manufacturers based on the interpretation of relevant excise rules and the capital nature of the DGPP. The decision reinforced the manufacturers' right to claim Modvat credit on duty paid components of capital goods, even if the final product was exempt from duty payment.