2004 (1) TMI 243 - AT - Central Excise

Summary

Issues:
- Denial of Modvat credit in respect of capital goods (moulds)

Analysis:

The appeal was filed against the order denying the benefit of Modvat credit in relation to capital goods, specifically moulds, used in the manufacturing process of plastic parts and components for motor vehicles. The appellants were availing Modvat credit for both inputs and capital goods. The issue arose when a show cause notice was issued, contending that the appellants were not entitled to credit for duty paid on the moulds as the invoices were not in their name. The adjudicating authority upheld the demand and imposed a penalty, a decision that was later affirmed on appeal.

The appellants argued that Rule 57Q of the Central Excise Rules allows Modvat credit on capital goods used in the factory for manufacturing final products. They emphasized that the moulds were indeed capital goods and were used in the production of final products. Citing precedents such as the case of Sharda Motors Industries Ltd. and M/s. Hongo India (P) Ltd. & Ors., the appellants contended that the credit of duty paid on capital goods used in manufacturing final products within the same factory is permissible under Rule 57Q(6) of the Central Excise Rules.

On the other hand, the Revenue contended that since the appellants sold the capital goods to M/s. General Motors India Ltd., the latter was considered the owner of the goods, thus disqualifying the appellants from claiming the credit. However, the Tribunal found that the moulds were manufactured by the appellants for M/s. General Motors India Ltd., and the invoices reflected the consignment to the appellants for further use in their factory. The moulds were utilized in the production of plastic components for motor vehicles, confirming their role as capital goods used in the manufacturing process. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting the appellants the benefit of Modvat credit for the moulds.