1997 (5) TMI 286 - AT - Central Excise

Summary

Issues involved: Determination of whether refractory bricks used for repairing and constructing furnace qualify as "Capital Goods" under Rule 57A of the Central Excise Rules for Modvat credit.

Summary:
The Appellate Tribunal CEGAT, Mumbai deliberated on the issue of whether refractory bricks used for furnace repair and construction are considered "Capital Goods" under Rule 57A of the Central Excise Rules, allowing the assessee to claim Modvat credit. The Commissioner had previously ruled against this classification, citing that the furnace, of which the bricks are a part, is not classifiable under Tariff Heading 84.17.

The appellant's Advocate argued that the furnace is integral to the glass manufacturing process, emphasizing its significance in operations. On the other hand, the Departmental Representative contended that since the furnace itself is not an excisable commodity, no credit should be granted for its component parts.

The Tribunal noted that Rule 57Q does not mandate that the "Capital Goods" themselves must be dutiable for credit on their parts to be claimed. The definition of capital goods under Rule 57Q is broad, encompassing various machinery and equipment used in production processes. The bricks in question, forming part of the furnace, were deemed eligible for credit as they fall under the category specified in the explanation to Rule 173Q.

It was highlighted that the expanded definition of capital goods, including refractories of Chapter 69, clarified the eligibility for credit even before its formal amendment in March 1995. The Tribunal ultimately set aside the impugned order, allowing the appeal and affirming the availability of credit for the refractory bricks used in the furnace construction and repair.