2005 (6) TMI 178 - AT - Central Excise

Summary

Issues:
Admissibility of capital goods credit for cement used in civil foundation and welding electrodes used for repairs and maintenance of plant and machinery in March 1995.

Analysis:
The judgment revolves around the admissibility of capital goods credit for two items - cement used in civil foundation and welding electrodes used for repairs and maintenance of plant and machinery in March 1995. The Member (J) considered previous decisions to determine the eligibility of the respondents for capital goods credit for these items.

In the case of cement used in civil foundation, the Member (J) referred to a previous decision by the Chennai Bench of the Tribunal where Modvat credit was allowed for similar usage. Following this precedent, the Member (J) allowed capital goods credit for cement used in the civil foundation to provide structural support to plant and machinery during the disputed period.

Regarding the welding electrodes used for repairs and maintenance of plant and machinery, the Member (J) analyzed conflicting decisions. While the lower appellate authority allowed capital goods credit for welding electrodes under Rule 57Q, citing a specific Tribunal decision, the Revenue relied on a different Tribunal decision that held such welding electrodes were not covered under the definition of capital goods. The Member (J) noted that all decisions recognized welding electrodes as capital goods but differed on their eligibility for Modvat credit under Rule 57Q during the disputed period. Ultimately, the Member (J) concluded that as the welding electrodes were used solely for repairs and maintenance of machinery and not for production or processing of goods, capital goods credit was not available for the respondents for these items during the disputed period.

In conclusion, the judgment upheld the capital goods credit for cement used in civil foundation but set aside the allowance for welding electrodes used for repairs and maintenance. As a result, the Revenue's appeal was partially allowed, with the decision being dictated and pronounced in open court.