1998 (11) TMI 172 - AT - Central Excise

Summary

Issues:
Appeal against ineligibility of Modvat credit under capital goods scheme for TOR Steel, Cement, and Nickel Plates. Contesting the impugned order for Nickel Plates, Cement & Tor Steel, and imposition of penalty.

Analysis:
1. The appeal challenged the Order-in-Appeal that deemed Modvat credit under the capital goods scheme as ineligible for TOR Steel, Cement, and Nickel Plates. The total duty involved was specified for each item, with the appeal limited to contesting the order for Nickel Plates, Cement, and Tor Steel, along with the penalty imposition.

2. The appellant's representative argued that Nickel Plates were spare parts of equipment integral to the manufacturing process of Caustic Soda Lye and Flakes, making them eligible for Modvat credit. Regarding Tor Steel and Cement, the absence of a clear definition of 'Plant' led to a reliance on judicial interpretations to establish eligibility for Modvat credit based on their use in the manufacturing process.

3. The Judicial Departmental Representative (JDR) reiterated the Order-in-Appeal's stance on Nickel Plates but opposed the eligibility of Cement and Tor Steel. Citing relevant case laws, the JDR argued that building materials like Cement and Steel structures used in construction are not eligible for credit as capital goods based on previous tribunal decisions and judicial precedents.

4. The appellant's representative countered the JDR's arguments by distinguishing the facts of previous cases and highlighting the specific use of Cement and Steel in the present scenario. The absence of a clear definition of 'plant' under the Modvat Scheme necessitated a reliance on common-sense interpretations and trade meanings, leading to the conclusion that Cement and Tor Steel are recognized as building materials and not eligible for Modvat credit.

5. The judgment concluded that Cement and Tor Steel, being acknowledged as building materials, are not eligible for Modvat credit based on previous tribunal decisions. However, Nickel Plates were deemed integral to the manufacturing process of Caustic Soda Lye and Flakes, making them eligible for credit under Rule 57Q. The penalty imposed was reduced, and the appeal partially succeeded in modifying the orders accordingly for Nickel Plates while upholding the ineligibility of Cement and Tor Steel for Modvat credit.