1997 (10) TMI 221 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on pipes and tubes.
2. Interpretation of 'capital goods' under Rule 57Q.
3. Availability of Modvat credit on components, spare parts, and accessories.

Analysis:
The appeal was filed against the order denying Modvat credit on pipes and tubes, claiming they are essential parts of machinery used in manufacturing V.P. Sugar. The appellant argued that these pipes are crucial for the functioning of the Quad Body, necessary for the production process. Referring to Rule 57Q and a clarification by the Central Board of Excise and Customs, the appellant requested a remand for reevaluation based on the clarification.

The respondent contended that the appellants did not follow the correct procedure for claiming Modvat credit and that the benefit was rightly denied as the pipes were not considered capital goods or components. The respondent emphasized that the description of machinery was missing in the declaration, supporting the denial of credit on brass pipes.

Upon hearing both sides, it was found that the denial of Modvat credit was based on the pipes and tubes not being classified as 'capital goods' or parts of machinery. A clarification by the Board regarding the availment of Modvat credit on components, spare parts, and accessories under Rule 57Q highlighted that all parts, components, and accessories classifiable under any Chapter heading are eligible for Modvat credit if used with capital goods specified in the rule.

As the clarification by the Board was issued after the original order, the impugned order was set aside, and the matter was remanded for a fresh decision by the jurisdictional Asstt. Commr., Central Excise, Moradabad. The appellants were granted a personal hearing, and the respondents were allowed to raise legal and factual objections during the adjudication process. The appeal was disposed of through remand for further evaluation in light of the clarification provided by the Board.