2003 (11) TMI 132 - AT - Central Excise

Summary

Issues: Denial of capital goods eligibility under Rule 57Q for 'Vapour absorption pump'

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue at hand is the denial of capital goods eligibility under Rule 57Q for a 'Vapour absorption pump'. The appellants were aggrieved by this denial, despite the pump being crucial for the manufacturing process. The pump is used to produce chilled water for various sections of a Tyre Cord Plant, where temperature and humidity control are vital due to the sensitivity of the manufacturing process. The chilled water circulation is essential to prevent coagulation of Viscose and maintain quality standards. The denial was based on precedents regarding the eligibility of certain equipment like Humidifiers and Air Conditioners as capital goods. However, the appellants argued that the essential nature of the chilled water movement was not considered, and the lower authorities seemed to deny eligibility without fully assessing the importance of the 'Vapour absorption pump' in the manufacturing process.

The Tribunal noted that the denial of eligibility was based on precedents regarding Humidifiers and Air Conditioners, but the essential nature of the 'Vapour absorption pump' in the manufacturing process was not fully considered. The appellants argued that if the pump was not essential, it would not make commercial sense to have it in the factory. The Tribunal observed that the lower authorities seemed to be denying eligibility without fully evaluating the crucial role of the pump in maintaining product quality. The Tribunal emphasized that the credit eligibility extends to machinery essential for manufacturing goods, and in this case, the 'Vapour absorption pump' was deemed an essential component. Therefore, the appeal was allowed, overturning the denial of capital goods eligibility for the 'Vapour absorption pump'.