1999 (8) TMI 275 - AT - Central Excise

Summary

Issues:
1. Allowance of Modvat credit on boiler material.
2. Allowance of Modvat credit on pipe fittings and pipes.
3. Allowance of Modvat credit on turbines.
4. Allowance of Modvat credit on cables.

Issue 1: Allowance of Modvat credit on boiler material:
The Revenue filed appeals against the allowance of Modvat credit on boiler material, arguing that raw materials for the manufacture of a boiler should not be considered as machines or parts eligible for Modvat credit. However, the respondent's counsel cited a Tribunal decision emphasizing that inputs used in the manufacture of capital goods, like boilers, are entitled to Modvat credit under Rule 57D(2). The Tribunal agreed with the respondent's argument, holding that Modvat credit on boiler material is admissible under Rule 57D(2).

Issue 2: Allowance of Modvat credit on pipe fittings and pipes:
The Revenue contended that pipe fittings and pipes do not qualify as capital goods eligible for Modvat credit as they are not machines or plants. In response, the respondent's counsel referred to previous Tribunal decisions stating that pipes used in the manufacturing process are considered capital goods. The Tribunal agreed with the respondent, ruling that pipes and pipe fittings used for conveying steam in the production process are eligible for Modvat credit under Rule 57Q.

Issue 3: Allowance of Modvat credit on turbines:
The Revenue argued that turbines do not contribute to production and thus should not be eligible for Modvat credit. However, the respondent's counsel explained that turbines are crucial for generating electricity used in manufacturing, making them eligible for Modvat credit as capital goods. The Tribunal concurred, stating that turbines used in electricity generation for manufacturing processes qualify for Modvat credit.

Issue 4: Allowance of Modvat credit on cables:
Regarding cables, the Revenue questioned their eligibility for Modvat credit. The respondent's counsel referenced a Larger Bench decision, affirming that cables are considered capital goods eligible for Modvat credit under Rule 57Q. The Tribunal upheld this view, stating that Modvat credit on cables is admissible as per the Central Excise Rules.

In conclusion, the Tribunal upheld the allowance of Modvat credit on boiler material, pipe fittings, turbines, and cables, based on the specific criteria and precedents discussed for each item. The appeals were disposed of in favor of the respondents, affirming their entitlement to Modvat credit on the mentioned items.