1997 (7) TMI 367 - AT - Central Excise

Summary

Issues:
The denial of Modvat credit on capital goods (cement and steel structure) under Rule 57Q of Central Excise Rules, 1944.

Details:
The appellants, setting up a Blast furnace, claimed Modvat credit on cement and steel structure used in its erection. The issue arose when the authority denied the credit, stating that these items did not meet the definition of capital goods under Rule 57Q. The appellants argued that cement and steel structure are vital components in the fabrication of the blast furnace, falling under the definition of capital goods. They cited technical and legal dictionaries to support their interpretation of "plant" to include buildings, land, machinery, and equipment used in manufacturing. Referring to legal precedents, they emphasized the broad interpretation of "in the manufacture of goods" to encompass all processes directly related to production.

The respondent, however, contended that cement and steel structure did not qualify as capital goods as per Rule 57Q. They maintained that these items, used in erecting the blast furnace, were akin to building materials and not considered part of the plant itself. Citing a Supreme Court ruling, they argued that building materials used for construction cannot be classified as plant in the manufacturing process.

The Tribunal referred to Rule 57Q, which defines capital goods as machinery, equipment, tools, or appliances used in production or processing of goods. Despite the appellants' assertion that cement and steel structure were integral to the blast furnace, the Tribunal aligned with the Supreme Court's interpretation that building materials, like cement and steel structure, do not qualify as plant in the manufacturing process. Consequently, the appeal was dismissed based on this understanding.