2013 (8) TMI 501 - HC - Central Excise

Disallowance of Modvat-credit - t part and accessories of the capital goods - HR/MS/GC sheers plates/angles/channels/supporting structure etc. - Held that - The Adjudicatory Authority had correctly denied the Modvat-credit - The goods in question were neither used for producing nor for processing of any goods or bringing about any change in any substances for the manufacture of final products. Nature of Goods - Whether the Tribunal was justified in holding that HR/MS/GC sheets plates/angles/channel/supporting structure etc. were not part and accessories of the capital goods installed in the factory - When even the Asstt. Commissioner of Central Excise admitted that these goods were used in the machine - Held that - The items in the present case were not falling within the meaning of capital goods as defined in explanation to Rule 57Q of the Central Excise Rules, 1944. COMMISSIONER OF C. EX., COIMBATORE Versus JAWAHAR MILLS LTD. 2001 (7) TMI 118 - SUPREME COURT OF INDIA and COMMISSIONER OF C. EX., COIMBATORE Versus JAWAHAR MILLS LTD 2001 (7) TMI 118 - SUPREME COURT OF INDIA was on the user test, which was in respect of goods in fabrication of chimney was an integral part of the diesel generating plant. The goods in the present case do not fall within the meaning of Explanation 1(a) of Rule 58Q. We also find that Explanation 1(b) of Rule 58Q is not attracted to the goods in the present case inasmuch as capital goods in Explanation 1(b) includes components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or applicants used for aforesaid purpose. Decided against assessee.

Summary

Issues:
Appeal against Customs Excise Service Tax Appellate Tribunal's order regarding disallowance of Modvat-credit on HR/MS/GC sheets/plates/angles/channels/supporting structure. Interpretation of whether these items qualify as parts and accessories of capital goods installed in the factory.

Analysis:
1. The appellant claimed Modvat-credit on various items used in machines and for fabrication, repair, and replacement purposes. Adjudicating Officer denied credit citing lack of specific role explanation for these items. Tribunal referenced previous cases to distinguish between raw materials and parts/components of capital goods, concluding that the items were not parts/accessories.

2. Appellant cited a Supreme Court case where steel plates and M.S. Channels used in chimney fabrication were considered capital goods. However, the High Court found the items in question did not meet the definition of capital goods under Rule 57Q of the Central Excise Rules, as they were not used for producing or processing goods or bringing about changes in substances for final product manufacture.

3. High Court noted that the goods in question did not qualify as capital goods as per Rule 57Q's explanation. The items were not used for production or processing of goods, unlike the case cited by the appellant where items were integral to a plant's pollution control system. Consequently, the court upheld the Tribunal's decision to deny Modvat credit, dismissing the appeal.

Conclusion:
The High Court dismissed the Central Excise Appeal, upholding the Tribunal's decision to disallow Modvat-credit on the items in question. The judgment emphasized the distinction between raw materials and parts/components of capital goods, ultimately determining that the items did not meet the criteria for capital goods under Rule 57Q. The court's decision was based on the specific usage and applicability of the items in the context of capital goods definitions and previous legal precedents.