1998 (9) TMI 253 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit on Mild Steel Plates and Channels under Rule 57Q of Central Excise Rules, 1944.

Analysis:
The appeal involved the admissibility of Modvat credit amounting to Rs. 47,925/- availed by M/s. Kisan Sahkari Chini Mills Ltd. on Mild Steel (M.S.) Plates and Channels under Rule 57Q of the Central Excise Rules, 1944. The Asstt. Commissioner of Central Excise, Sitapur, disallowed the Modvat credit and imposed a penalty of the same amount. The appellants argued that the M.S. Plates and Channels were capital goods used in the manufacturing of structures for the sugar plant, making them eligible inputs for Modvat credit.

The Respondent contended that the M.S. Plates and Channels were used in civil construction work for factory expansion, not directly related to the manufacturing process of the final product. They cited a Tribunal decision stating that Steel Structurals were constructional materials and not component parts of the plant. The Tribunal analyzed the definition of "capital goods" under Rule 57Q, emphasizing that capital goods are those used for producing or processing goods or bringing about changes in substances for manufacturing final products. The Tribunal noted that the M.S. Plates and Channels were used for fabricating structures for factory expansion, not for producing or processing goods.

The Tribunal examined various decisions cited by the appellants, finding them inapplicable to the specific circumstances of the case. The Commissioner of Central Excise (Appeals) upheld the Asstt. Commissioner's order, stating that M.S. Plates and Channels did not qualify as capital goods under Rule 57Q. The Commissioner emphasized that these items were steel structurals for civil work, not components or accessories of machinery for producing goods. The Commissioner also reduced the penalty imposed from Rs. 47,925/- to Rs. 10,000/- based on the case's facts and circumstances.

In conclusion, the Tribunal agreed with the Commissioner's decision, rejecting the appeal except for reducing the penalty amount. The judgment highlighted that M.S. Plates and Channels were not used for producing or processing goods but for civil construction work, making them ineligible for Modvat credit under Rule 57Q during the relevant period.