1997 (12) TMI 333 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on certain items as capital goods under Rule 57Q.

Analysis:
The case involved the denial of Modvat credit on specific items by the Commissioner of Central Excise (Appeals) on the grounds that they did not qualify as capital goods under Rule 57Q. The Appellants, engaged in the manufacture of Synthetic Filament Yarn, were alleged by the Department to have availed Modvat credit on items like pressure gauges, process control instruments, electronic digital scale, etc., which were contested through a Show Cause Notice.

The first item in question was the Mercury in Steel dial Thermometer. The Appellants argued that it was essential for measuring temperature and should be considered a measuring instrument eligible for Modvat credit as capital goods. However, the Tribunal ruled that since it was the mercury and not the thermometer itself that was claimed as a capital good, it did not qualify for Modvat credit.

Next, the Electronic Control Panel was discussed. The Appellants justified its necessity for controlling temperature in the manufacturing process, likening it to other essential capital goods like Power Panels and Panel Boards. The Tribunal agreed that electronic control panels were integral to the plant and equipment for electric circulation control, thus qualifying as capital goods.

The Static Convertor was also contested, with the Appellants arguing its importance in converting power supply for machine operation. The Tribunal referenced a previous case to support that Static Convertors were essential for controlling electricity flow in the plant and machinery, hence qualifying for Modvat credit.

The Chips Storage Tank was deemed a necessary component for processing polyester chips, essential for the final product's manufacture. The Tribunal concurred, stating that such tanks were part of the plant and eligible for Modvat credit.

Other items like Alphaline Differential Pressure Transmitter, Alternator, and Spin Finish Metering Pump were also analyzed, with the Tribunal ruling in favor of Modvat credit eligibility based on their essential functions in the manufacturing process. However, common items like S.S. Tanks were excluded from Modvat credit eligibility due to their general nature.

In conclusion, the Tribunal modified the impugned order to allow Modvat credit on items deemed essential capital goods for the manufacturing process, disposing of the appeal accordingly.