2005 (11) TMI 119 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on water coolers under Rule 57Q of Central Excise Rules.
2. Delay in filing the declaration under Rule 57T(4) for claiming credit.
3. Use of water coolers in the manufacture of exempted engineering products.
4. Claiming Modvat credit on capital goods used in the production process.

Analysis:
1. The appellants were denied Modvat credit on water coolers under Rule 57Q due to the delay in filing the declaration under Rule 57T(4). The appellants contended that the water coolers were used in condensing Synthesis gas, which was further used in the production of Ammonia, a taxable final product. The Ld. Advocate argued that the delay in filing the declaration was justified, and the final product being taxable should entitle them to claim Modvat credit on the capital goods.

2. The delay in filing the declaration for claiming credit on water coolers was explained by the appellants, attributing it to procedural reasons. Despite the water coolers being used in the manufacture of an intermediate product that was exempt from duty, it was highlighted that the intermediate product, Synthesis gas, was eventually used in the production of Ammonia, a dutiable final product. The appellants presented a certificate from the Additional Chief Engineer confirming the installation of water coolers in the synthesis loop, supporting their claim for Modvat credit.

3. The Tribunal emphasized that Modvat credit cannot be denied solely based on the use of inputs in the manufacturing process of an exempted intermediate product. As the final product, Ammonia, attracted duty payment, the appellants met the conditions specified under Rule 57Q for claiming capital goods credit on the water coolers. The certificate provided by the Additional Chief Engineer further substantiated the usage of water coolers in the synthesis loop, reinforcing the appellants' entitlement to the Modvat credit.

4. Consequently, the appeal was allowed in favor of the appellants, granting them the entitlement to claim capital goods credit on the water coolers. It was noted that a previous appeal had been dismissed, and no further orders were deemed necessary in that regard. The judgment highlighted the importance of satisfying the conditions prescribed under Rule 57Q to avail of Modvat credit on capital goods used in the manufacturing process, especially when the final product attracts duty payment.