2004 (8) TMI 201 - AT - Central Excise

Modvat credit on capital goods - Eligibility of Modvat credit on coal bunkers and its accessories, chequered plates/hard plates, columns of heavy fabricated structures and bracings, and HR coils under specific sub-headings during the relevant periods - HR coils eligible for credit as capital goods? - HELD THAT - We are of the view that coal bunkers are not part of boiler and not eligible for Modvat credit during the relevant period, hence the accessories and parts of coal bunkers are also not eligible for Modvat credit. Therefore, the lower authorities have correctly denied the credit and we uphold the findings of the Commissioner (Appeals). As regards chequered plates/hard plates, we find that these are general purpose items having multifarious use. The appellants before the lower authorities have pleaded that these are used as components/spare parts of machinery. They have neither specified that for which machinery these are used as spares nor we consider that chequered plates can be considered as component parts or spare parts of machinery. The decision relied upon are not applicable in the present case as in the cases relied upon by the appellants there is a specific finding that CI plates are used in the base for boiler or chequered plates are used to support various machinery parts of machines. In the present case, the appellants have not identified that how these chequered plates/hard plates are used as components of machinery. Therefore in the absence of any evidence that these are really component parts of machinery we do not find any deficiency in the order of Commissioner (Appeals). Rejection of credit on columns of heavy fabricated structures and bracings, we find that the lower authorities have given the finding that columns and bracings are in the nature of construction material. Going by the nature of the material and the nature of their use, these do not fit into definition of capital goods. We find that the same view has been taken by the Tribunal in case of Malavika Steel Ltd. v. CCE, Allahabad 1997 (7) TMI 367 - CEGAT, NEW DELHI and Vivek Alloys Ltd. v. CCE, Coimbatore 1997 (12) TMI 185 - CEGAT, MADRAS . In the present case we do not find that such structures can be considered as capital goods eligible for credit under Rule 57Q. We accordingly uphold the order of the lower authorities. Denial of credit on HR coils under sub-heading 7208.31 - These are independent and general use items having multifarious uses and are known as HR coils only in the market. These are not identified in the commercial parlance as components spares or accessories of the machinery. Therefore these are not eligible for credit as capital goods. Regarding the appellant's claim that these may be allowed as inputs, under Rule 57A, the Commissioner (Appeals) has given the finding that these are not the subject-matter of the present proceedings and the appellant may take up the matter with the jurisdictional Assistant Commissioner/Dy. Commissioner separately who may consider the same and pass the appropriate order. We find that the order of the Commissioner (Appeals) is correct in law. We do not find any reason to interfere with it. In the circumstances all the three appeals are rejected.

Summary

Issues Involved:
The issues involved in this case include the eligibility of Modvat credit on coal bunkers and its accessories, chequered plates/hard plates, columns of heavy fabricated structures and bracings, and HR coils under specific sub-headings during the relevant periods.

Eligibility of Modvat Credit on Coal Bunkers and Accessories:
The appellants claimed Modvat credit on coal bunkers and its parts with accessories under Rule 57Q of Central Excise Rules. The Commissioner (Appeals) denied the credit stating that coal bunkers are used for temporary storage of crushed coal in boilers, but are not considered as parts of boilers or power plants. The appellants argued that coal bunkers were essential for boiler operation and relied on relevant decisions. However, the Tribunal found that coal bunkers were not part of the boiler and upheld the denial of Modvat credit on coal bunkers and its accessories.

Eligibility of Modvat Credit on Chequered Plates/Hard Plates:
Regarding chequered plates/hard plates, the appellants claimed these were used as components of machinery and sought Modvat credit. However, the Tribunal determined that these plates were general-purpose items with multifarious uses and not specifically identified as components/spares or accessories of machinery. The Tribunal found no evidence to support the claim that these plates were component parts of machinery, thus upholding the Commissioner (Appeals) decision to deny Modvat credit on chequered plates/hard plates.

Denial of Credit on Columns of Heavy Fabricated Structures and Bracings:
The denial of Modvat credit on columns of heavy fabricated structures and bracings was based on the finding that these items were construction materials rather than capital goods. The Tribunal agreed with the lower authorities that these structures did not qualify as capital goods under Rule 57Q, as they were not considered components, spares, or accessories of machinery. Citing previous decisions, the Tribunal upheld the denial of Modvat credit on columns and bracings.

Denial of Credit on HR Coils:
The appellants sought Modvat credit on HR coils used for fabrication of pipelines, but the lower authorities denied the credit, stating that HR coils were general-purpose items with multifarious uses and not specifically identified as capital goods. The Tribunal concurred with the denial, noting that HR coils did not meet the criteria under Rule 57Q for capital goods eligibility. The Commissioner (Appeals) suggested the appellants pursue the matter separately if HR coils could be considered as inputs, but upheld the denial of Modvat credit on HR coils.

In conclusion, the Tribunal rejected all three appeals, affirming the denial of Modvat credit on coal bunkers and accessories, chequered plates/hard plates, columns of heavy fabricated structures and bracings, and HR coils based on their respective eligibility criteria under Rule 57Q of the Central Excise Rules.