2004 (12) TMI 125 - AT - Central Excise

Summary

Issues:
Grant of Modvat credit on duty paid for repair charges in relation to a boiler.

Analysis:
The appeal was filed by the Revenue against the lower appellate authority's decision to grant Modvat credit of duty paid on repair charges for a boiler. The assessee, engaged in the manufacture of Denatured Spirit, sent the old boiler for repair by a job worker outside the factory. The job worker repaired the boiler and returned it after payment of duty on the job work charges. The assessee claimed Modvat credit for this duty under Rule 57Q in their RG 23C Part-II. The department contended that duty paid on repair charges of capital goods outside the factory was not eligible for Modvat credit under Rule 57Q. A show cause notice was issued, and while the original authority upheld the department's view, the first appellate authority disagreed, leading to the Revenue's appeal.

The Revenue's appeal lacked substantiation, with the only argument being that duty paid on repair charges by a job worker outside the factory was not allowable as Modvat credit under Rule 57Q. In contrast, the learned Counsel for the respondents supported the Commissioner (Appeals) order citing a previous decision of the Bench. The repaired capital goods were cleared to the assessee by the job worker with a duty-paying invoice, meeting the requirements of Rule 57G. The duty paid on the capital goods was eligible for Modvat credit since the goods were used again in the manufacturing process of final products in the assessee's factory, fulfilling all conditions of Rule 57Q. Consequently, the appeal was deemed meritless, and the Revenue's appeal was rejected.