1997 (12) TMI 350 - AT - Central Excise

Summary

Issues:
1. Appeal by Revenue against Commissioner (Appeals) order.
2. Disallowance of Modvat credit on various items by Asstt. Collector.
3. Arguments regarding the classification of items as capital goods.
4. Interpretation of Rule 57Q of the Central Excise Rules.

Analysis:
1. The appeal was filed by the Revenue challenging the order of the ld. Commissioner (Appeals) who interpreted Rule 57G to include all items in the field of capital goods, thereby allowing the appeal of the Assessee. The dispute arose from the disallowance of Modvat credit on specific items by the Asstt. Collector, leading to the appeal before the Tribunal.

2. The Respondents, engaged in manufacturing various products, filed declarations under Rule 57T and claimed Modvat credit on items like Grinding Wheel, Electric Motor, Gear pump, HRC fuse, Static Convertor, Heat Exchanger, and Cable. The Asstt. Collector disallowed the credit, but the Collector (Appeals) allowed the Assessee's appeal, leading to the current appeal before the Tribunal.

3. The arguments presented by both sides focused on whether the items in question qualified as capital goods under Rule 57Q. The ld. JDR for the Appellant contended that certain items like Grinding Wheel, Electric Motor, and Electric Cables were not used directly in the production or processing of final products, hence not eligible for Modvat credit. Conversely, the ld. Advocates for the Respondents argued that these items were integral to the manufacturing process, supporting their classification as capital goods.

4. The Tribunal, after considering the submissions and examining Rule 57Q, noted the criteria for claiming Modvat credit on capital goods. The rule stipulated that credit was permissible on machinery or parts used for production, processing, or bringing about a change in the final product. Upon evaluating the function and necessity of the disputed items in the manufacturing process, the Tribunal concluded that they indeed qualified as capital goods. Consequently, the order of the Commissioner (Appeals) was upheld, and the Revenue's appeal was rejected.