2003 (8) TMI 135 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit on cement, chemical items, and H.S.S. hand tap under Rule 57Q of the Central Excise Rules, along with imposition of penalty.

Cement: The Tribunal extended capital goods credit to cement based on the Supreme Court's decision in Jawahar Mills Ltd., emphasizing the wide definition of capital goods in Rule 57Q. The contention that building material used for construction cannot qualify under Section 8(3)(b) of the Central Sales Tax Act was rejected, as Rule 57Q's expression is broader. Therefore, credit on cement was deemed admissible.

Chemical items: Although not qualifying as capital goods under Rule 57Q, the chemical items used for water treatment in the sponge iron plant were considered eligible for Modvat credit under Rule 57A of the Central Excise Rules, as they are essential inputs for the manufacturing process.

H.S.S. hand tap: This tool used in Lathe Machines for cutting metal was granted credit based on the Tribunal's decision in a similar case, where credit was allowed for H.S.S. drill. The argument against credit based on a different case was dismissed, as the appellants' use of Lathe machines for specific purposes justified the credit.

Conclusion: The Tribunal ruled in favor of the appellants, allowing credit on cement, H.S.S. hand tap under Rule 57Q, and on chemical formulations under Rule 57A of the Central Excise Rules, setting aside the disallowance and penalty imposed.