2009 (7) TMI 432 - AT - Central Excise

Whether Ceramic Balls are eligible inputs for the purpose of Modvat credit - Commissioner (Appeals) in impugned order has held that Ceramic Balls are eligible inputs for the purpose of Modvat credit - The reason given by revenue for denying the credit on ceramic balls is that the same does not participate in the actual process of refining or purifying and are in the nature of capital goods - Ld. Advocate also submits that the issue is no more res integra and stands settled in their own case holding that Ceramic Balls used for making activated carbon beds which are further used for desulpurification of feed stock ethylene are eligible inputs. - As such, by following the ratio of Tribunal judgment in the same respondent s case, I find no infirmity in the view adopted by the Commissioner (Appeals). Revenue s appeal is accordingly, rejected.

Summary

Issues:
1. Eligibility of Ceramic Balls for Modvat credit.
2. Classification of Ceramic Balls as inputs or capital goods.

Eligibility of Ceramic Balls for Modvat credit:
The judgment revolves around the eligibility of Ceramic Balls for Modvat credit. The Commissioner (Appeals) held that Ceramic Balls qualify as eligible inputs for Modvat credit based on the clarification provided by the Board and relevant judicial decisions. The Board clarified that input credit is admissible as long as the inputs are used in or in relation to the manufacture of finished goods, irrespective of their physical presence in the final product. The Ceramic Balls were used in the purification process essential for producing quality final products, supporting the retention of Silica Gel in the purification columns. The Tribunal found that Ceramic Balls were indeed used in relation to the manufacture of the final product, making them eligible for Modvat credit. The judgment cited relevant legal precedents to support this conclusion, emphasizing the importance of inputs in the manufacturing process.

Classification of Ceramic Balls as inputs or capital goods:
The Revenue contended that Ceramic Balls should be classified as capital goods and excluded from the definition of inputs under Rule 57A. They argued that Ceramic Balls only supported Silica Gel in the purification process and did not participate in the actual refining or purifying process. However, the Revenue did not address whether Ceramic Balls would qualify as eligible capital goods for Modvat credit. The Tribunal noted that the Revenue's main contention focused on the non-participation of Ceramic Balls in the production process but did not specifically argue for their classification as capital goods. The judgment highlighted legal precedents where similar items like ramming mass, fiber glass, and filter mesh were considered eligible inputs, supporting the inclusion of Ceramic Balls for Modvat credit. The Tribunal also referenced a case where Ceramic Balls used for desulphurization were deemed eligible inputs, further solidifying their eligibility. Ultimately, the Tribunal rejected the Revenue's appeal, affirming the Commissioner (Appeals) decision regarding the eligibility of Ceramic Balls for Modvat credit.

In conclusion, the judgment clarifies the eligibility of Ceramic Balls for Modvat credit, emphasizing their role in the manufacturing process and citing relevant legal precedents to support the decision. The classification of Ceramic Balls as inputs or capital goods was also discussed, with the Tribunal ultimately rejecting the Revenue's appeal and upholding the eligibility of Ceramic Balls for Modvat credit.