1999 (6) TMI 123 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57Q for eligibility of Modvat credit on specific items used in factory production.

Analysis:
The judgment deals with the appeal filed by the Revenue against the order of the Commissioner (Appeals), Central Excise, Ghaziabad. The Commissioner had ruled that certain items used in the factory, such as power cables, electric motors, distribution board, static convertors, control panel, and centrifugal pumps, qualified as capital goods under Rule 57Q and were eligible for Modvat credit.

The Tribunal noted the actual use of each disputed item in the factory. Power cables were essential for connecting various machines to enable production of PVC sheeting and film. Electric motors, both AC and DC, were used to drive the main calender machine and laminator for cooling PVC film sheetings. Centrifugal pumps circulated cold water for cooling PVC film sheeting. Distribution boards provided power to drive machines for production. Static convertors, electronic cards, and control panels regulated DC motors' speed for producing PVC film and sheeting. Air cooled water/fluid coolers were crucial for efficient working of DC control panels and motors. Screw compressors supplied air for pneumatic operations in the production process.

The Tribunal referred to previous decisions to justify the eligibility of each item for capital goods credit. Electrical items like power cables, distribution boards, static convertors, electronic cards, and control panels were deemed eligible based on a Larger Bench decision. Centrifugal pumps were considered machines covered by the explanation to Rule 57Q. Air cooled water/fluid coolers were also eligible due to their role in ensuring the efficient functioning of control panels and motors. The Tribunal dismissed the Department's attempt to deny credit on certain items, citing precedent cases that supported the eligibility of air compressors, including screw compressors.

Ultimately, the Tribunal upheld the lower appellate authority's decision, ruling that all disputed items were entitled to capital goods credit based on the interpretation of Rule 57Q and previous tribunal decisions. The appeal filed by the Revenue was rejected, affirming the eligibility of the items for Modvat credit in the factory setting.