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2016 (11) TMI 917 - AT - Central ExciseWhether the appellant is entitle for Modvat credit in respect of testing instrument namely Instron Model 14464 Table Mounted Universal Testing Instrument under the Capital goods in terms of Rule 57Q of Erstwhile Central Excise Rules, 1944? - Held that - the testing instrument is used for testing of raw material as well as finished goods. The testing of raw material and finished goods is integral part of the manufacturing process of the final product therefore it cannot be said that testing instrument is not used in the manufacture of final product. In the various judgments Modvat credit under the Capital goods was allowed in respect of testing equipment and apparatus. Reliance placed on the decision of the case of OBLUM ELECTRICALS INDUSTRIES PVT. LTD. Versus COMMR. OF C. EX., HYDERABAD 2003 (1) TMI 491 - CEGAT, BANGALORE The Tribunal consistently held that testing process is vital part of the manufacturing of final product therefore the credit of testing instrument is admissible. As per my above discussion, which is based on judgments as cited above, the appellant is entitle for the Modvat credit under Rule 57Q in respect of testing instrument. The impugned order is set aside and appeal is allowed.
Issues Involved:
Whether the appellant is entitled to Modvat credit for a testing instrument under the Capital goods in terms of Rule 57Q of Erstwhile Central Excise Rules, 1944. Detailed Analysis: Issue 1: Entitlement to Modvat Credit The central issue in this case revolves around the entitlement of the appellant to Modvat credit for a testing instrument under Rule 57Q of the Erstwhile Central Excise Rules, 1944. The Adjudicating authority and the first appellate authority denied the Modvat credit, arguing that the testing instrument was used solely for testing purposes and not for producing, processing, or bringing about any change in substance for the manufacturing of the final product. However, the appellant contended that the testing of raw materials and finished goods is an integral part of the manufacturing process, making the testing instrument essential for the production of the final product. Judicial Precedents The judgment cited various precedents where Modvat credit under Capital goods was allowed for testing equipment and apparatus. For instance, in the case of OBLUM ELECTRICALS INDUSTRIES PVT. LTD., the Tribunal emphasized that material handling and testing equipment are eligible for capital goods credit, irrespective of whether they work through mechanical or electronic processes. Similarly, in the case of VINDHYA TELELINKS LTD., the Tribunal held that testing equipment falls under the definition of capital goods and is entitled to Modvat credit. These precedents highlight the importance of testing processes in the manufacturing of final products, supporting the appellant's claim for Modvat credit. Decision Based on the analysis of the precedents and the integral role of testing instruments in the manufacturing process, the Tribunal, represented by Mr. Ramesh Nair, Member(Judicial), concluded that the appellant is indeed entitled to Modvat credit under Rule 57Q for the testing instrument in question. The impugned order denying the credit was set aside, and the appeal was allowed in favor of the appellant. In conclusion, the judgment underscores the significance of testing instruments in the manufacturing process and establishes the eligibility of such instruments for Modvat credit under Capital goods rules. The decision provides clarity on the admissibility of Modvat credit for testing equipment, aligning with established legal precedents and the essential role of testing in the production of final goods.
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