2004 (12) TMI 205 - AT - Central Excise

Summary

Issues: Denial of Modvat credit under Rule 57Q of the Central Excise Rules, 1944 for the period Sept.'97 to Feb.'98 in respect of capital goods used for generating steam and electricity.

In this case, the appellants appealed against the denial of Modvat credit for capital goods used in a "high pressure boiler" for generating steam and electricity. The appellants argued that the boiler and its components were eligible for Modvat credit under Rule 57Q during the material period. The appellants contended that the classification of the boiler under Heading No. 84.02 of the CETA schedule made it eligible for Modvat credit, and all components thereof were also eligible under the relevant provisions. The appellants relied on precedents where capital goods used in similar setups were held eligible for Modvat credit. The Department contested these claims, but it was found that there was no case that any of the goods were ineligible for capital goods credit based on their classification. The Tribunal concluded that the goods used in the "high pressure boiler" were eligible for Modvat credit as they fell under the relevant provisions of Rule 57Q. The denial of credit based on the usage of steam and electricity was deemed unsustainable in light of the legal precedents cited by the appellants. Therefore, the impugned order denying the Modvat credit was set aside, and the appeal was allowed.