1996 (10) TMI 252 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit on hot tops.
2. Admissibility of Modvat credit on refractory goods.
3. Eligibility for Modvat credit on refractory goods as capital goods.

Analysis:

Issue 1: Admissibility of Modvat credit on hot tops
The appellants contested the order confirming a demand of Rs. 56,369.80 under Rule 57-I and a penalty of Rs. 5,000 under Rule 57-O for availing credit on hot-tops and refractory goods. The appellants argued that hot tops are essential for proper casting of steel ingots and thus eligible for Modvat credit. The Tribunal, after considering previous decisions, upheld the admissibility of Modvat credit on hot tops, citing their earlier judgment in the appellants' favor. Therefore, Modvat credit on hot tops was deemed admissible.

Issue 2: Admissibility of Modvat credit on refractory goods
Regarding the admissibility of Modvat credit on refractory goods, the department relied on previous decisions disallowing such credit. The Tribunal referred to cases like Mukund Iron & Steel Works Ltd. and Raipur Metal Industries where Modvat credit on refractory goods was denied. The Tribunal concurred with these precedents, holding that Modvat credit on refractory bricks shall not be admissible under Rule 57A as they are not considered inputs. The Tribunal upheld the decision to disallow Modvat credit on refractory goods.

Issue 3: Eligibility for Modvat credit on refractory goods as capital goods
The appellants argued that if Modvat credit on refractory goods was not admissible as inputs, they should be eligible for such credit as capital goods. They cited procedural lapses and emphasized that substantive benefits under the Modvat scheme should not be denied due to procedural issues. However, the Tribunal found the appellants' argument unconvincing, stating that the claim for Modvat credit should be clearly specified under the relevant rules. The Tribunal affirmed that Modvat credit on refractory bricks was not admissible under Rule 57A or Rule 57Q due to procedural non-compliance.

In conclusion, the Tribunal upheld the admissibility of Modvat credit on hot tops but denied the same for refractory goods, ruling in favor of the department's contention. The appeal was disposed of accordingly.