1999 (10) TMI 329 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit on electric wires and cables, doshion exchanger, and water softening plant under Rule 57Q.

Analysis:
1. The appeal challenged the Commissioner (Appeals) New Delhi's order disallowing Modvat credit of Rs. 89,384 on electric wires and cables, doshion exchanger, and water softening plant under Rule 57Q. The denial of credit on electric wires and cables was based on previous tribunal decisions. The Assistant Commissioner held that doshion exchanger and water softening plant were not used for producing or processing goods. The Commissioner (Appeals) denied Modvat credit on these items following a tribunal decision in Commissioner v. Shanmugaraja Spg. Mills.

2. In their written submissions, the appellants argued that Modvat credit on wires and cables should be allowed based on a recent Larger Bench decision in Jawahar Mills Ltd. v. C.C.E. They also cited five tribunal decisions to support their claim for Modvat credit on doshion exchanger and water softening plant, stating that inputs used for water treatment had been held eligible for credit in those cases.

3. The Judge considered the submissions and records. Regarding wires and cables, the Larger Bench decision in Jawahar Mills case supported the appellants, making electric wires and cables eligible as capital goods under Rule 57Q. Thus, Modvat credit claimed on these items was deemed admissible. However, for doshion exchanger and water softening plant, the tribunal decisions cited by the appellants did not support their case, as those decisions pertained to inputs used in water treatment, not machinery used for water treatment purposes. Consequently, the claim for Modvat credit on doshion exchanger and water softening plant was rejected.

4. The Judge partly allowed the appeal, permitting Modvat credit on wires and cables but upholding the Commissioner (Appeals) findings on doshion exchanger and water softening plant. The appellants were granted consequential benefits in line with the allowed credit.

5. In conclusion, the appeal was allowed in part, with Modvat credit being allowed on electric wires and cables, while the denial of credit on doshion exchanger and water softening plant was upheld.