2000 (4) TMI 667 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on specific items by the Commissioner of Central Excise (Appeals) to manufacturers of woollen yarn.

Analysis:

1. Extra Equipment (Lathe Machine):
The lathe machine used for repair and maintenance of spare parts, not for producing goods. Denied credit as not capital goods under Rule 57Q.

2. Truing Machine:
Equipment for truing ring frame rollers, shaft, etc., to reduce faults in woollen yarn. Held as workshop equipment for maintenance, not for production. Credit denied as not substantiated for production or processing.

3. Machinery for Crushing:
Machine to crush coal for steam generation crucial for dying woollen fiber. Considered capital goods under Rule 57Q, eligible for credit.

4. Damper:
Part of humidification plant controlling airflow for desired humidity. Initially denied credit based on a previous Tribunal decision, later overruled. Considered crucial for production, hence entitled to capital goods credit.

5. Vacuum Cleaner:
Used to remove impurities during processing of woollen fiber, crucial for dust-free fiber emergence. Eligible for credit based on a Tribunal decision regarding similar items in a cement plant.

6. Pump Spares:
Spares for water pumps supplying water to the dye house for chemical processes on fiber. Since crucial for production of final products, considered eligible for capital goods credit.

In conclusion, Modvat credit was not allowed for Extra Equipment and Truing Machine, while credit was granted for Machinery for Crushing, Damper, Vacuum Cleaner, and Pump Spares. The penalty imposed was reduced proportionately due to the partial allowance of the appeal.