1999 (7) TMI 269 - AT - Central Excise

Summary

Issues involved:
Admissibility of capital goods credit for a Transformer under Rule 57Q of the Central Excise Rules in February 1995.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi pertained to the admissibility of capital goods credit for a Transformer under Rule 57Q of the Central Excise Rules in February 1995. In the absence of representation from the respondents, the appeal proceeded based on established legal precedents. The learned D.R. argued that the Commissioner (Appeals) had allowed the credit for a distribution transformer citing relevant case law and contending that subsequent notifications were clarificatory and retrospective in nature. It was highlighted that the Department had not accepted a particular decision and had referred the matter to the Hon'ble Allahabad High Court for consideration.

The Tribunal, referencing various judicial decisions including those of the Supreme Court and the Gujarat High Court, examined the scope of capital goods eligible for credit under Rule 57Q. The Tribunal emphasized that the expression 'used for producing of any goods for the manufacture of the final product' should not be equated with 'used for bringing about any change in any substance for the manufacture of the final product.' The Tribunal further deliberated on the retrospective nature of certain amendments introduced through notifications and concluded that the matter must be decided based on the language of the provision at the relevant time.

Applying the principles established in the Jawahar Mills case, the Tribunal determined that the distribution transformer qualified as a capital good within the definition provided in the Explanation to Rule 57Q. The transformer was deemed essential for the production or processing of goods necessary for the business operations of the respondents. Consequently, the appeal filed by the Revenue was rejected based on the findings and analysis presented in the judgment.