1999 (4) TMI 153 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for Modvat credit u/s Rule 57Q of the Central Excise Rules.
2. Interpretation of "capital goods" within the meaning of Rule 57Q.
3. Retrospective or prospective application of amendments to Rule 57Q.

Summary:

Issue 1: Eligibility for Modvat credit u/s Rule 57Q of the Central Excise Rules
The primary issue in these appeals is the eligibility for Modvat credit under Rule 57Q of the Central Excise Rules. The Revenue's stand is that items such as welding electrodes, wires, and cables are not "capital goods" as per the explanation to Rule 57Q, which covers goods used only in production, processing, or bringing about any change in substance for the manufacture of the final product. The Revenue also contends that the amendment to Rule 57Q on 16-3-1995 is prospective, not retrospective.

Issue 2: Interpretation of "capital goods" within the meaning of Rule 57Q
The Tribunal examined the definition of "capital goods" as per Rule 57Q and relevant case laws, including the Supreme Court's judgments in Indian Copper Corporation Ltd. and J.K. Cotton Spinning & Weaving Mills Co. Ltd. The Tribunal concluded that the definition of "capital goods" in Explanation 1(a) to Rule 57Q is similar to the provisions construed by the Supreme Court. The Tribunal held that items such as wires and cables, control panels, welding electrodes, etc., qualify as "capital goods" under Rule 57Q and are eligible for Modvat credit.

Issue 3: Retrospective or prospective application of amendments to Rule 57Q
The Tribunal found that the issue of whether the amendments to Rule 57Q by Notification 11/95 dated 16-3-1995 and Notification 14/96-C.E. dated 23-7-1996 are retrospective or prospective becomes academic. The Tribunal decided the matter based on the language of the provision as it stood at the material time, concluding that the items recognized as eligible for capital goods credit by Notification 14/96 are covered by Explanation 1(a) to Rule 57Q as it stood during the relevant period.

Conclusion:
The appeals are disposed of with a ruling that items such as wires and cables, control panels, welding electrodes, etc., qualify as "capital goods" under Rule 57Q and are eligible for Modvat credit. The Tribunal's decision is based on the interpretation of the provision as it stood at the relevant time, making the retrospective or prospective application of amendments academic.