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2023 (5) TMI 650 - AT - Central ExciseMODVAT Credit - parts /components of DG set - manufacturer of these DG sets which was commissioned / directed by another person - HELD THAT - On going through the latest decision of the Apex Court in COMMISSIONER OF CENTRAL EXCISE I CHANDIGARH VERSUS M/S AMBUJA CEMENT LTD. 2022 (9) TMI 1456 - SUPREME COURT , inter-alia, observing that DGPP sets on which modvat credit is allowed is part and parcel of the factory of the assessee which is ultimately used in the manufacture of the end product- cement. Therefore, Sl. No. 5 of the Table appended to rule 57 Q shall be attracted and the assessee shall be entitle to the modvat credit on such DGPP sets being part / components of the cement plant/final manufacture product. The above analysis is clearly applicable to the facts herein as the parts of DG sets were imported and were received by the assessee in their factory even where the purchases are made by WIL. Further, the assessee acquired the components of the generating set, not for use in the manufacture of generating set as a final product but to generate electricity which was required for the manufacture of yarn etc. which was their final product. Needless to mention that the parts, spares and accessories are covered under the definition of capital goods under Rule 57-Q. The present appeal by the revenue is dismissed.
Issues:
The appeal challenges the allowance of modvat credit on parts/components of DG sets by the Commissioner (Appeals). Issue 1: Modvat Credit Eligibility The revenue contested the entitlement of the assessee to claim modvat credit on parts/components of DG sets, arguing that they are not the manufacturers of these sets. The Tribunal noted that similar issues had been decided in previous decisions affirmed by higher courts. The assessee, engaged in manufacturing yarns, availed modvat credit on capital goods. They received spare parts for DG sets, used them in their factory, and took credit for duty paid on these components. The revenue argued that since another party assembled the DG sets on-site, the assessee cannot claim credit. However, the Tribunal found that the parts were used to generate electricity for the manufacturing process, making them eligible for modvat credit as capital goods under Rule 57-Q. Decision: The Tribunal affirmed the order of the Commissioner (Appeals), dismissing the revenue's appeal.
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