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Issues involved: Disallowance of Modvat credit on certain capital goods under Rule 57Q and eligibility of Modvat credit for goods purchased by contractor/job worker under Rule 57T(3).
Issue 1 - Disallowance of Modvat credit on certain capital goods under Rule 57Q: The appellants, engaged in sugar manufacturing, claimed Modvat credit on items like angles, channels, plates, shapes, and sections. Authorities denied credit stating these items were not eligible as per Rule 57Q. The appeal also involved denial of credit on goods purchased by contractor/job worker without requisite permission. Arguments were made citing previous Tribunal decisions supporting eligibility of certain items for Modvat credit. The appellants sought allowance of credit on various items, emphasizing that procedural lapses should not lead to denial of substantial benefits. On the other hand, the authorities argued that items like angles, channels, plates, etc., were used for construction purposes and not in the production process. They contended that permission under Rule 57T(3) was mandatory for goods purchased by contractor/job worker, which was not obtained in this case. Judgment: The Tribunal considered the evidence and case law presented. It found that Modvat credit was admissible on plates, shapes, sections, M.S. angles, M.S. channels, steel structures, electric wires, cables, and main lighting distribution boards based on previous Tribunal decisions. However, the Tribunal upheld the denial of Modvat credit on goods purchased by the contractor/job worker due to the lack of requisite permission under Rule 57T. It emphasized that permission was crucial for allowing credit on such goods and that the absence of permission was not merely a procedural matter. Consequently, the appeals were disposed of accordingly, with any consequential relief to be granted as per the law.
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