2002 (12) TMI 165 - AT - Central Excise

Summary

Issues: Availability of Modvat credit for welding electrodes, oxygen, and DA gas.

Analysis:
1. The appeal filed by M/s. Maihar Cement raises the issue of whether Modvat credit is available for welding electrodes, oxygen, and DA gas used in the manufacturing process.
2. The appellant's representative argued that these items are integral to the manufacturing process as they are used for repairing and remaking worn-out parts essential for the manufacturing activity to continue.
3. The advocate cited precedents where Modvat credit was allowed for similar items used in refurbishing machinery parts, emphasizing the direct nexus with the manufacturing process.
4. The Revenue countered by stating that these products do not qualify as capital goods under Rule 57Q of the Central Excise Rules post-27-3-96, as they are used for repairing worn-out parts rather than directly in the manufacturing of finished goods.
5. The Tribunal considered both arguments and noted that the repair or remaking of worn-out parts is crucial for the manufacturing process to continue smoothly, as acknowledged in the Modi Rubber Ltd. case regarding lubricants.
6. Drawing from the Modi Rubber Ltd. case, the Tribunal held that the repair of worn-out parts is directly related to the manufacture of finished goods, making the appellant eligible for Modvat credit on duty paid for welding electrodes, oxygen, and DA gas.
7. The Tribunal also highlighted that a declaration filed by the assessee under Rule 57Q is sufficient for extending credit as per Rule 57A, ultimately setting aside the previous order and allowing the appeal.