1999 (12) TMI 212 - AT - Central Excise

Summary

Issues: Determination of whether the goods qualify as 'capital goods' under Rule 57Q of the Central Excise Rules and assessment of compliance with the provisions of sub-rule (2) of Rule 57T regarding intimation requirements.

Analysis:

1. The first issue revolves around whether the goods in question, specifically 'Cerwool Ceramics Fibre Blankets' (CCFB), meet the definition of 'capital goods' under Rule 57Q. The Tribunal referred to a prior case involving cerwool pads used as lining material for a furnace, where such items were deemed integral parts of the furnace and thus classified as capital goods. Drawing a parallel, the Tribunal concluded that CCFB, used in a similar manner in the appellants' factory, also qualifies as capital goods under the same rule. Therefore, the Tribunal held that CCFB is eligible for Modvat credit under Rule 57Q.

2. The second issue pertains to whether the Modvat credit could be rightfully denied based on the alleged non-compliance with sub-rule (2) of Rule 57T, which requires timely intimation to the jurisdictional Supdt. of Central Excise regarding capital goods. The appellants had delayed the intimation by one to two days, attributing it to office processing delays. The Tribunal found that such minor delays should not hinder the appellants' entitlement to the Modvat credit, especially since the necessary Modvat declarations were filed. The Tribunal emphasized that the delay in intimation should have been condoned, considering it a procedural lapse rather than a substantive violation. Consequently, the Tribunal disagreed with the lower authorities' decision to disallow the Modvat credits due to these minor delays and deemed the penalty imposed as unjustified.

In conclusion, the Tribunal set aside the orders of the lower authorities and allowed the appeal, affirming the eligibility of CCFB as capital goods for Modvat credit and emphasizing the importance of considering minor procedural delays in compliance matters.