2005 (3) TMI 232 - AT - Central Excise

Summary

Issues: Eligibility of fire crete and whytheat as capital goods for Modvat credit under Rule 57Q during January-July 1996.

Analysis:
1. Issue of Eligibility for Capital Goods Credit: The main issue in this case was whether fire crete and whytheat, used as parts of the rotary kiln for cement manufacturing, were eligible for Modvat credit under Rule 57Q during the period of January-July 1996. The Commissioner (Appeals) had initially held these items as ineligible for capital goods credit, citing their classification under Heading 38.16 of the CETA Schedule. However, it was noted that the admissibility of Modvat credit on capital goods depended exclusively on Tariff Headings/Sub-headings relevant to the goods, effective from 1-3-1997 onwards. The period in question was before this date, and the Commissioner (Appeals) failed to assess whether the items could be eligible under the existing clauses of Rule 57Q(1).

2. Case Law Citations: The appellants presented a list of decisions to support their claim, including cases like Century Cements Ltd. v. CCE, CCE, Jaipur v. J.K. Udaipur Udyog Ltd., and CCE, Mumbai v. Mukund Ltd. These cases highlighted the eligibility of similar refractory materials as capital goods for Modvat credit under Rule 57Q, emphasizing the essential role of such materials in the manufacturing process. The absence of any contradictory binding decision further strengthened the appellants' argument.

3. Decision and Rationale: After considering the records, the absence of representation from the appellants, and the arguments presented, the Tribunal found that the items in question were indeed refractory materials crucial for the cement manufacturing process. The line of decisions cited by the appellants, which supported the eligibility of such materials as capital goods, played a significant role in the final decision. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants, granting them the benefit of Modvat credit for the disputed period of January-July 1996.