1999 (8) TMI 426 - AT - Central Excise

Summary

Issues:
Allowance of Modvat credit on specific items challenged by Revenue.

Enamelled Winding Wire/Copper Winding Wire:
The Department argued that these items are not covered by Rule 57Q as they are parts of electric motors, which are not capital goods. However, the Respondent contended that electric motors are essential for running a plant used in production, making them machines covered by Rule 57Q. The judge found that electric motors are integral to plant operation, and since the wires are parts of electric motors, they are covered by Rule 57Q. The decision was supported by a Larger Bench ruling in Jawahar Mills Ltd.

Rotary Units, F.R.B. Sleeves, Shaft, Impeller:
The Department claimed these items are not covered by Rule 57Q as they lack a nexus to machinery used in production. In contrast, the Respondent argued that these items are parts of machines producing Maize products, making them eligible for Modvat credit under Rule 57Q. The judge agreed that since these are parts of machines, they qualify for Modvat credit under Rule 57Q.

Cylindrical Vertical Tanks:
The Department contended that these tanks are not capital goods as they are used for storage purposes, not production. However, the Respondent argued that these tanks are used in the manufacturing process, making them capital goods under Rule 57Q. The judge found that since the tanks are used for storing raw materials, which is part of the manufacturing process, they are covered under Rule 57Q for Modvat credit.

In conclusion, the judge rejected all seven appeals filed by the Revenue after considering the arguments and finding in favor of the Respondent on the eligibility of Modvat credit for the specific items in question.