1999 (12) TMI 458 - AT - Central Excise

Summary

Issues:
Disallowed capital goods-credit under Rule 57Q of Central Excise Rules for certain items of goods.

Analysis:
The case involved a dispute regarding the disallowance of capital goods-credit under Rule 57Q of the Central Excise Rules for specific items of goods by the jurisdictional Assistant Commissioner of Central Excise. The Assistant Commissioner disallowed the credit, stating that the goods did not fall under the definition of 'capital goods' under Rule 57Q(1). However, in the appeal filed by the party, the Commissioner of Central Excise (Appeals) reversed the decision and allowed the credit for items like Fuse Failure Board, Spares for measuring equipments (Vibrotest), and NGEF Thyristors, amounting to Rs.12,145. The Revenue appealed against this decision before the Tribunal.

Upon examination of the records, including the show-cause notice and the reply submitted by the party, it was noted that the goods in question were parts of the Uninterrupted Power Supply (UPS) system and were used for measuring vibrations of machines. The Revenue contended that these items were not used for production, processing, or bringing about any change in substances for manufacturing final products. The party, in its reply to the show-cause notice, provided detailed explanations on the nature of use of the goods, emphasizing their essential role in ensuring continuous and flawless production of final products.

The Tribunal considered the arguments presented by both sides, including references to previous decisions. The party's advocate highlighted the importance of measuring and checking instruments as essential for the manufacture of final products, citing a relevant Tribunal decision. Additionally, the advocate referred to a decision by the Tribunal's Larger Bench, which supported the inclusion of the goods in question under the definition of 'capital goods' as per the Explanation to Rule 57Q(1) of the Central Excise Rules.

After careful consideration of the submissions, the Tribunal relied on the decision of its Larger Bench in a previous case and concluded that the goods in question qualified as 'capital goods' eligible for Modvat credit under Rule 57Q. The Tribunal dismissed the Revenue's appeal based on the interpretation provided by the Larger Bench, which deemed the goods to fall under the category of capital goods as per the relevant provisions.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal interpretations, and the final decision reached by the Tribunal.