1999 (6) TMI 273 - AT - Central Excise

Summary

Issues:
Appeal against denial of Modvat credit on various items as capital goods.

Analysis:
The appeal was filed against the denial of Modvat credit on a list of items including Teaming Compound, Hot Top, Refractories, Ramming Mass, Foundry Flux Chemicals, CTD BAR, Sodium Silicate, Gears, Electric Motor Parts, Electric Switchgears, Spare Seal Kit, Hydraulic Cylinder, Rough Forged Blank, Electric Wire & Cable, Patra line, Clay Graphite Stopper Head, and Nozzels.

The appellant's counsel argued that these items serve specific functions essential for manufacturing processes, citing examples like Teaming Compound used for non-defective ingot stripping, Hot Top for ingot quality, and Refractory for furnace lining protection. The counsel also referenced a previous Tribunal judgment to support the admissibility of Modvat credit on these items.

In response, the JDR for the respondents highlighted that the appellants did not clarify if they were claiming Modvat credit on the items as capital goods or inputs. Referring to a Karnataka High Court decision, the JDR argued that certain items like Rough Forged Blanks and CTD Bars do not qualify as capital goods or components. The JDR contended that Clay Graphite Stopper Head is not covered under relevant rules.

After considering arguments from both sides and examining the functions and locations of the items, the Tribunal determined the eligibility of Modvat credit. The Tribunal held that Modvat credit would be allowed on most items except CTD Bars, Rough Forged Blank, and Patra Line Metal. Regarding the Clay Graphite Stopper Head, the Tribunal reasoned that it is part of handling equipment, which is considered capital goods eligible for Modvat credit. The Tribunal's decision was supported by a previous case and a Larger Bench ruling, ultimately disposing of the appeal accordingly.