2006 (4) TMI 20 - AT - Central Excise

Central Excise - Cenvat/Modvat - Capital goods - Component Parts/Parts and accessories of specified goods are entitled for credit in respect of their classification

Summary

Issues:
1. Entitlement to Modvat credit for specific goods.
2. Interpretation of Rule 57Q of Central Excise Act.
3. Consideration of Board circular dt. 2-12-1996.
4. Applicability of Modvat credit for components of specified goods.

Analysis:
The case involved the issue of entitlement to Modvat credit for specific goods used in the manufacture of Audio Magnetic Tape and Audio Cassettes. The appellants claimed credit for U. V. Lamp, Fluorescent Tube, and U. V. Radinat Tube, which are parts of a printing machine falling under sub-heading 8443 of Central Excise Tariff. The dispute arose as the Tribunal initially held that these goods are not entitled to Modvat credit as capital goods under Rule 57Q of the Central Excise Act.

The appellants argued that the parts and components of specified goods should also be considered as capital goods under Rule 57Q. They relied on a Board circular dated 2-12-1996, which clarified that manufacturers are entitled to credit for components, spares, and accessories of specified goods regardless of their classification. The appellants also cited previous Tribunal decisions where credit for similar goods was allowed based on the same Board circular.

Upon review, the Tribunal found that the earlier decision denying credit did not consider the Board circular from 1996. The Tribunal noted that the circular specified that component parts of specified goods are entitled to credit based on their classification. Since the printing machine was classified as a specified good under Rule 57Q, the component parts of the machine, including the disputed goods, were deemed eligible for Modvat credit.

Consequently, the Tribunal set aside the impugned order and allowed the appeals, ruling in favor of the appellants. The judgment emphasized the importance of considering relevant Board circulars and classifications in determining the eligibility of goods for Modvat credit under the Central Excise Rules.