1999 (6) TMI 69 - AT - Central Excise

Summary

Issues:
Appeal against denial of Modvat credit on capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis:
The case involved an appeal concerning the denial of Modvat credit on capital goods under Rule 57Q of the Central Excise Rules, 1944. The appellants, engaged in manufacturing synthetic rubber and ethyl alcohol, were availing Modvat facility under Rule 57A on inputs and Rule 57Q on capital goods. The Department issued a Show Cause Notice (SCN) alleging various discrepancies, including the receipt of goods before filing the declaration, non-conformity of goods as capital goods, and improper documentation. The Dy. Commissioner confirmed the demand and imposed a penalty, which was upheld by the ld. Commissioner (Appeals), leading to the appeal before the Tribunal.

The appellant's representative argued that there was a delay in filing the declaration, but the Assistant Commissioner acknowledged the declaration after condoning the delay. The representative contended that the goods in question were essential spares and components of the machinery used in manufacturing synthetic rubber and ethyl alcohol, citing relevant case law to support the classification of these items as capital goods eligible for Modvat credit under Rule 57Q.

The respondent's representative reiterated the findings of the lower authorities, opposing the appellant's claims. After considering the submissions from both sides and examining the case law on the subject, the Tribunal concluded that the disputed spares, except for a chemical spray, qualified as capital goods or parts/components of capital goods essential for the machinery in the appellant's factory. Consequently, the Tribunal held that the Modvat credit on these items as capital goods was admissible to the appellants, except for a specific credit amount related to the chemical spray.

In conclusion, the appeal was disposed of in favor of the appellants, allowing the Modvat credit on the disputed items deemed as capital goods, except for a specific credit amount related to the chemical spray.