2004 (7) TMI 196 - AT - Central Excise

Summary

Issues:
Grant of Modvat credit on storage tank used as equipment for processing manufactured gases and as an accessory to Oxygen-Nitrogen Plant.

Analysis:
The Revenue challenged the grant of Modvat credit on a storage tank used for processing gases, arguing it does not strictly fall under the definition of 'used in relation to the manufacture of final product.' The Commissioner, however, found the storage tank to be essential for the plant and eligible for credit under the capital goods scheme. The Commissioner relied on the judgment in CCE v. Modi Xerox Ltd., where it was held that Modvat credit applies not only to machinery but also to parts and accessories used in manufacturing final products.

The Revenue cited cases where Modvat credit was denied for similar tanks, such as fabricated steel tanks and storage tanks for drying towers. However, the assessee referenced their own case where the benefit was granted for a cryogenic tank storing gases essential for final products. They also mentioned judgments like CCE v. Surya Roshni Ltd. and Union Carbide India Ltd. v. CCE to support their claim. The assessee argued that the judgments cited by the Revenue were distinguishable as they lacked a connection to the final product's manufacture.

Upon review, the Tribunal found that the storage tank was indeed used as a component and accessory essential for storing gases used in manufacturing final products. Citing the precedent set by the West Regional Bench in the assessee's own case, the Tribunal upheld the grant of Modvat credit on the storage tank. The Tribunal concluded that the tank's role in storing gases for manufacturing final products aligned with previous judgments, rejecting the Revenue's appeal.