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2005 (12) TMI 11 - AT - Central ExciseModvat credit on capital goods - MS channels Angles Plates etc. used as supporting structure for holding machinery and not as construction materials
Issues:
Denial of Modvat credit on capital goods. Analysis: The case involves the denial of Modvat credit on M.S. Channels, Angles, Support Structure, Plates, etc. The adjudicating authority disallowed the credit, stating that these items do not qualify as capital goods under Chapter 72 and cannot be considered spares. The Commissioner (Appeals) upheld this decision. The appellant argued that these goods are essential for supporting machinery and are used as spares. They provided detailed explanations and charts showing the placement and function of these items in the factory. Upon review, it was found that the items in question are crucial for holding machinery in place and ensuring its proper functioning. The appellant demonstrated that without these materials, the machinery would not be adequately supported, leading to potential collapse. It was also noted that duty liability was discharged on these items, further supporting their classification as capital goods. Referring to a previous judgment in the case of Simbhaoli Sugar Mills Ltd., where Modvat credit was allowed on similar items, the Tribunal ruled in favor of the appellant. This decision was also affirmed by the Apex Court and followed in subsequent cases, establishing a precedent for granting Modvat credit on such items used for supporting machinery. In contrast, a case involving CCE, Noida Vs. DSM Ltd. where credit was denied on different grounds was deemed inapplicable to the current situation. The Tribunal emphasized the distinction between the facts of the present case and those of the DSM Ltd. case, reinforcing the validity of granting Modvat credit in the current scenario. Based on the discussions and precedents cited, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal of the appellant, granting consequential relief as deemed necessary.
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