2005 (11) TMI 126 - AT - Central Excise

Summary

Issues: Denial of Modvat credit on steel inputs for construction and denial of Modvat credit on HDPE pipes for water pipeline.

Analysis:
1. Denial of Modvat credit on steel inputs: The Commissioner denied Modvat credit on steel inputs used for construction, but the tribunal upheld this decision citing relevant judgments. The appellant had paid duty on these inputs before the show cause notice, leading to the setting aside of the penalty imposed. The tribunal agreed with the denial of Modvat credit on steel inputs for construction based on established legal principles.

2. Denial of Modvat credit on HDPE pipes: The tribunal considered the HDPE pipes and fittings used for carrying water to the factory. The appellant's argument that water is an essential raw material was accepted, and it was undisputed by the Revenue. Citing various legal precedents, including judgments from the Apex Court and different Tribunals, the tribunal concluded that the benefit of Modvat credit should be extended. The tribunal highlighted cases where Modvat credit was granted on similar items used outside factory premises but essential for the manufacturing process. Relying on these precedents, the tribunal allowed the plea for Modvat credit on HDPE pipes and modified the impugned order accordingly.

In conclusion, the tribunal upheld the denial of Modvat credit on steel inputs for construction but allowed the plea for Modvat credit on HDPE pipes used to carry water to the factory. The decision was based on established legal principles and supported by relevant judgments, ensuring a fair and reasoned outcome in the matter.