2005 (11) TMI 115 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit for iron and steel materials, parts, and components used in the fabrication of Generator Set and crusher plant within the factory premises.
2. Eligibility of Modvat credit for components of Wagon Drill used in mines for lime stone excavation.
3. Interpretation of Rule 57Q of the Central Excise Rules, 1944 regarding capital goods credit.
4. Applicability of Sl. No. 5 in the Table annexed to Rule 57Q(1) for parts and components used in the fabrication of capital goods.

Analysis:
1. The ld. Commissioner (Appeals) allowed Modvat credit for iron and steel materials, parts, and components used in the fabrication of Generator Set and crusher plant within the factory premises. The Revenue challenged this decision. The Tribunal found that Genset and Crusher were eligible capital goods for Modvat credit under Rule 57Q(1) during the period of dispute. The parts and components used in the fabrication of these capital goods were rightly held to be eligible for credit by the ld. Commissioner (Appeals). Therefore, the Tribunal dismissed the Revenue's challenge against this part of the impugned order.

2. Regarding the components of Wagon Drill used in mines for lime stone excavation, the Tribunal referred to the Supreme Court's judgment in Jaypee Rewa Cement v. Commissioner. It was noted that the Wagon Drill was used in the lime stone mines off the cement factory, making the components of the capital goods ineligible for Modvat credit under Rule 57Q. The ld. Commissioner (Appeals) erred in granting capital goods credit for these components used outside the cement factory. Consequently, the Tribunal allowed the Revenue's appeal on this issue.

3. The Tribunal emphasized that the eligibility for Modvat credit under Rule 57Q depends on the specific use of the capital goods and their components. The correct interpretation of the rule was crucial in determining the availability of credit. The Tribunal's decision was guided by the provisions of Rule 57Q and the Supreme Court's precedent in similar matters.

4. The Tribunal's detailed analysis considered the specific headings under the CETA Schedule and the relevance of Sl. No. 5 in the Table annexed to Rule 57Q(1) for determining the eligibility of Modvat credit for parts and components used in the fabrication of capital goods. The Tribunal's decision was based on a thorough examination of the facts and legal provisions involved in the case.

This judgment by the Appellate Tribunal CESTAT, CHENNAI provides a comprehensive analysis of the issues related to Modvat credit eligibility for various materials and components used in the fabrication of capital goods, highlighting the importance of adherence to the relevant rules and legal precedents in such matters.