2001 (11) TMI 201 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on an universal measuring machine.
2. Interpretation of Rule 57Q regarding the use of capital goods in relation to manufacturing final or intermediary products.

Analysis:
1. The appeal was filed against the denial of Modvat credit on a universal measuring machine by the Commissioner (Appeals), who found that the machine was not used in or in relation to the manufacture of finished or intermediate goods. The Commissioner concluded that the machine was not directly related to the production of goods and therefore denied the credit under Rule 57Q.

2. The appellants argued that the machine was essential for measuring profiles and probing directions of jigs, fixtures, and gauges used in manufacturing intermediary and final products like Tie Rod Ends and Steering products. They emphasized the importance of maintaining stringent accuracy for safety precision items. The appellants provided detailed explanations of how the machine assisted in the manufacturing process from casting to machining to assembly, ensuring compliance with specified measurements for quality control.

3. The appellants referenced the Supreme Court case of Jawahar Mills, where it was upheld that credit cannot be availed for items not directly or indirectly related to manufacturing final or intermediary products. They also cited the case of Rajasthan State Chemical Works to support their argument that quality control and testing equipment are integral to the manufacturing process.

4. The Senior Executive reiterated the importance of the measuring machine in ensuring the accuracy of jigs and fixtures used in production, as well as measuring the dimensions of the final product. Despite the appellants' submissions and arguments, the Tribunal found no evidence to rebut the Commissioner's finding that the machine was used for measuring and not directly related to manufacturing final or intermediary products.

5. The Tribunal emphasized that jigs and fixtures are tools and capital goods, not the final products of the appellant. Since no substantial evidence was presented to challenge the Commissioner's findings, the Tribunal dismissed the appeal, upholding the denial of Modvat credit on the universal measuring machine under Rule 57Q.