1998 (2) TMI 177 - AT - Central Excise

Summary

Issues:
Whether the appellants are entitled to the benefit of Modvat credit for fireclay crucibles under sub-heading 6901.00 of the Central Excise Tariff Act, 1985.

Analysis:
The appellants, engaged in manufacturing Ultra Marine Blue, claimed Modvat credit on fireclay crucibles used in their manufacturing process. The Assistant Commissioner denied the credit, considering the crucibles as apparatus or equipment under the Exclusion Clause of Rule 57A. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

The appellant's advocate argued citing various Tribunal decisions, including a case involving Reckitt & Coleman, to support the eligibility of Modvat credit for crucibles. He highlighted conflicting views within Tribunal decisions and emphasized that the Exclusion Clause only applies to complete machinery or self-contained assemblies.

The respondent's representative contended that crucibles, being reusable and not consumed after one operation, qualify as apparatus or equipment, citing precedents like Kerala Electric Lamps and Lohia Sheet Products cases. He argued that even if crucibles get consumed after a few uses, they do not meet the criteria for Modvat credit eligibility.

The Tribunal noted the conflicting views on Modvat credit for crucibles but found recent decisions leaning towards crucibles being eligible inputs. Referring to the Larger Bench decisions in the cases of Union Carbide Industries and Ramakrishna Steel Industries, the Tribunal concluded that crucibles were not covered by the Exclusion Clause.

Relying on the decision in the Escorts Ltd. case, the Tribunal emphasized the importance of determining the manner of use of crucibles to establish their eligibility for Modvat credit. The Tribunal also referenced the Goetze India Ltd. case where Modvat credit was allowed for crucibles, considering them as containers rather than machinery or equipment.

After reviewing the findings of the Assistant Commissioner, which acknowledged the crucibles as equipment used in processing but not as inputs, the Tribunal held that the crucibles were containers and not apparatus or equipment under the Exclusion Clause. Therefore, the appeal was allowed, granting the appellants the benefit of Modvat credit for the fireclay crucibles.