2003 (8) TMI 136 - AT - Central Excise

Summary

Issues: Modvat credit on old capital goods and duty paid on labour charges

In this case, the issue involved the appellants' claim for Modvat credit on duty paid for repairs of a capital good, specifically the Fibrizer Rotor Assembly. The Department objected to the credit, arguing that no new capital goods were received and that Modvat credit was not available for duty paid on labour charges. The adjudicating authority disallowed the credit and imposed a penalty, a decision upheld by the Commissioner (Appeals), leading to the present appeal.

The appellants contended that they were entitled to the credit under Rule 57Q as the duty was paid on the total value of the goods and job charges. They argued that the Department recognized the job worker's activity as "manufacture," justifying the duty paid on labour charges. The Department, however, maintained that Modvat credit was not available for old capital goods or duty paid on labour charges, citing precedents where minor repairs were not considered manufacture.

Upon review, the Tribunal found that the credit was taken within the statutory period under Rule 57Q, which allowed credit on specified capital goods. The Tribunal noted that the duty was paid on both the goods and labour charges, and the job worker's activity was considered manufacture by the Department. The Tribunal concluded that the appellants rightfully took the credit on duty paid for the capital goods used in manufacturing the final product, as per the valid invoice. Therefore, the impugned order disallowing the credit was set aside, and the appeal was allowed.