1998 (8) TMI 247 - AT - Central Excise

Summary

Issues:
Eligibility of water process generator for Modvat credit under Rule 57Q of Central Excise Rules.

Analysis:
The appeal concerns M/s. Aksh India Ltd. and the eligibility of the water process generator under Heading No. 84.05 of the Central Excise Tariff for Modvat credit. The Asstt. Commissioner denied the Modvat credit stating that the water process generator did not bring about any change in substance for manufacturing final products. However, the Commissioner of Central Excise (Appeals) disagreed and allowed the Modvat credit for the item. The respondents manufacture jelly filled optical fibre cables under Heading No. 85.44 of the Tariff.

During the hearing, the appellants' representative reiterated the grounds for denying the Modvat credit, while the respondents' consultant explained the necessity of the water process generator in the manufacturing process of jelly filled optical fibre cables. The consultant argued that without the generator, the jelly could not remain filled in the cables due to high temperatures during insulation with molten PVC. The Commissioner of Central Excise (Appeals) had highlighted the importance of the water process generator in the manufacturing process.

The appellate authority examined the functioning of the water process generator and its role in the manufacture of optical fibre glass. The appellate authority agreed with the Commissioner of Central Excise (Appeals) that the water process generator played a crucial role in the manufacturing process and brought about a substantial change in the final product. The Revenue cited a previous Tribunal decision related to the definition of capital goods under Rule 57Q but the appellate authority found that the water process generator was integral to the manufacturing process in this case.

After considering all relevant facts and arguments, the appellate tribunal upheld the decision of the Commissioner of Central Excise (Appeals) and rejected the appeal filed by the Revenue. The tribunal found no grounds to disturb the findings of fact regarding the eligibility of the water process generator for Modvat credit under Rule 57Q of the Central Excise Rules.