1997 (12) TMI 310 - AT - Central Excise

Summary

Issues:
- Admissibility of Modvat credit on various goods under Rule 57Q of the Central Excise Rules, 1944.
- Interpretation of whether certain goods qualify as capital goods for the purpose of Modvat credit.
- Application of case law precedents in determining the eligibility for Modvat credit.
- Clarification on the scope and ambit of the amended definition of Capital Goods under Rule 57Q.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the Collector of Central Excise, Meerut challenging the order of the Commissioner of Central Excise (Appeals) regarding the allowance of Modvat credit on specific goods. The Respondents, manufacturers of various products, availed Modvat credit on goods like Sheet Lifter, Electrodes, Transformer, Battery, Grinding Wheel, Electric Cables, Gear Oil, and Grease under Rule 57Q. The Department contended that these goods did not qualify as capital goods, leading to the disallowance of Modvat credit by the Asstt. Collector. However, the Commissioner (Appeals) overturned this decision, prompting the appeal by the Revenue.

In defense of the Respondents, their counsel cited various precedents to support the admissibility of Modvat credit on the mentioned goods. They referenced cases such as CCE v. R.K. Marbles Ltd., 1992 (58) E.L.T. T15, CCE v. Indian Rayon & Industries Ltd., CCE v. Nav Bharat Paper Mills Ltd., CCE v. Kunal Engineering, Classic Electricals (P) Ltd. v. CCE, M/s. Anil Steels Ltd. v. CCE, and J.K. Synthetics Ltd. v. CCE, Jaipur to establish that these goods qualified as capital goods for Modvat credit purposes.

Additionally, the Respondents' counsel highlighted the decision in M/s. Modi Alkalies & Chemicals Ltd. v. CCE, Jaipur, where the Tribunal clarified that the substituted Explanation to Rule 57Q is clarificatory and elucidates the scope of the amended definition of Capital Goods. The Judge, after considering the submissions and case law cited by both sides, ruled that Modvat credit was rightly allowed on most goods, including Sheet Lifter, Electrodes, Transformer, Battery, Grinding Wheel, Electric Cables, Gear Oil, and Grease. However, the Judge determined that Modvat credit on Transformer Oil was not admissible based on the facts of the case. Consequently, the impugned order was modified to reflect these findings, and the appeal was disposed of accordingly.