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2005 (6) TMI 176 - AT - Central Excise
Issues:
1. Correctness of allowing Modvat credit on certain items as capital goods under Rule 57-Q of the Rules. Analysis: In this appeal, the Revenue challenged the correctness of the impugned order-in-appeal that allowed Modvat credit to the respondents on specific items, treating them as capital goods under Rule 57-Q of the Rules. The learned counsel argued that the goods were supplied under duty paid invoices classified under Chapter 84 of the tariff, justifying the respondents' entitlement to the credit. However, the tribunal disagreed, stating that mere classification under Chapter 84 did not automatically qualify the goods for Modvat credit under Rule 57-Q. The tribunal examined the usage of the goods in the factory, as detailed by the respondents, which indicated their use in civil construction and supporting equipment, leading to the conclusion that they could be considered as 'capital goods' under Rule 57-Q. The tribunal distinguished this case from precedents like Mukand Ltd. v. CCE. Belgaum, CCE, Bhubaneswar-II v. Sarvesh Refractories (P) Ltd., and Bellary Steel & Alloys Ltd. v. CCE, Belgaum, where goods were held to be capital goods based on their usage and classification. In Mukand Ltd., the goods were not used for civil construction, in Sarvesh Refractories, Loadalls were used in the factory, and in Bellary Steel & Alloys, goods were used for technological structures. Despite the references to these cases, the tribunal found that the goods in question did not qualify as capital goods due to their specific usage for civil structures and equipment support, rather than for the purposes outlined in the cited cases. Consequently, the tribunal ruled in favor of the Revenue, setting aside the part of the order allowing Modvat credit to the respondents. The decision was based on the finding that the goods in dispute did not meet the criteria to be considered as capital goods under Rule 57-Q. The appeal of the Revenue was allowed, providing consequential relief in accordance with the law.
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