2003 (10) TMI 234 - AT - Central Excise

Summary

Issues:
1. Modvat credit for Silo Encasing
2. Modvat credit for Dust Collection System
3. Modvat credit for Pint Oil Liner

Modvat credit for Silo Encasing:
The Revenue challenged the Commissioner's order granting Modvat credit for Silo Encasing used in the production of sponge iron. The Commissioner justified the credit by explaining the essential role of Silo Encasing in the production process. The Tribunal cited precedents where storage tanks were considered capital goods eligible for Modvat credit, supporting the Commissioner's decision. The Tribunal upheld the Commissioner's order, stating that Silo Encasing is an integral part of the production machinery and qualifies for Modvat credit under Rule 57Q.

Modvat credit for Dust Collection System:
The Commissioner allowed Modvat credit for the Dust Collection System, considering it as pollution control equipment essential for removing dust during the sponge iron manufacturing process. The Tribunal referred to previous decisions where similar equipment was deemed eligible for Modvat credit, emphasizing their role in maintaining environmental standards. The Tribunal dismissed the Revenue's argument against granting credit, citing established precedents and upholding the Commissioner's decision to allow Modvat credit for the Dust Collection System.

Modvat credit for Pint Oil Liner:
Regarding the Modvat credit for Pint Oil Liner used in repairing pollution control equipment, the Revenue contended that such items were not eligible for credit. The Tribunal referred to a previous case where goods used for maintenance were deemed ineligible for Modvat credit. Considering the purpose of the Pint Oil Liner for repair and maintenance, the Tribunal agreed with the Revenue and set aside the Commissioner's decision to grant Modvat credit for the Pint Oil Liner. The appeal of the Revenue was successful in this aspect.

In conclusion, the Tribunal upheld the Commissioner's decision to grant Modvat credit for Silo Encasing and the Dust Collection System but sided with the Revenue in denying Modvat credit for the Pint Oil Liner used for repair purposes.