2006 (3) TMI 156 - HC - Central Excise

Summary

Issues:
Interpretation of Rule 57Q of the Central Excise Rules, 1944 regarding eligibility of Modvat credit on specific parts of machinery used in manufacturing.

Detailed Analysis:
The case involved an appeal under section 35G of the Central Excise Act, 1944, concerning the eligibility of Modvat credit on certain parts used in the manufacturing of cement. The respondent company, engaged in cement production, claimed credit of Central Excise duty paid on capital goods used in the factory under Rule 57Q of the Central Excise Rules, 1944. The dispute centered around whether Stacker Reclaimer parts and Structural Support for Conveyor System qualified as capital goods under the said Rule.

The Customs, Excise & Service Tax Appellate Tribunal held that the Structural Support for Conveyor System was essential for the installation of the conveyor and constituted accessories of the conveyor system, falling within the definition of capital goods eligible for credit under Rule 57Q. Similarly, the Tribunal determined that Stacker Reclaimers, used as material handling equipment during the manufacturing process, were integral to the production of final products and thus qualified as capital goods under the Rule.

The appellant challenged the Tribunal's decision, raising questions on the admissibility of Modvat credit on Stacker Reclaimer parts falling under a specific heading of the Central Excise Tariff and the eligibility of Structural Support for Conveyor System as capital goods under Rule 57Q. Upon review, the High Court upheld the Tribunal's findings as factual determinations, stating that Stacker Reclaimers and Structural Support for Conveyor System were covered by the definition of capital goods in Rule 57Q. The Court concluded that no substantial question of law arose for decision in the case and dismissed the appeal.

In essence, the judgment clarified that parts integral to the manufacturing process, such as Stacker Reclaimers and Structural Support for Conveyor System, qualify as capital goods under Rule 57Q of the Central Excise Rules, making them eligible for Modvat credit. The decision emphasized the importance of factual findings in determining the eligibility of specific components within the ambit of the legal provisions governing Central Excise duties.