2005 (7) TMI 488 - AT - Central Excise

Summary

Issues: Denial of capital goods credit for structural items used in fabricating structures to support pollution control equipments.

Analysis:
1. Issue of Eligibility for Capital Goods Credit: The lower authorities denied capital goods credit to the appellants for structural items used in fabricating structures to support pollution control equipments, stating that these items were not covered by the Explanation to Rule 57Q of the CE Rules, 1944. The appellate authority also found that these items were not specifically covered by the table annexed to Rule 57Q. However, the appellants claimed that these structural items were components of their pollution control equipments and thus eligible for capital goods credit under Explanation (1) to Rule 57Q(1). The learned Consultant relied on a Larger Bench decision and the decision affirmed by the Hon'ble Apex Court to support this claim.

2. Interpretation of Explanation to Rule 57Q(1): The judgment analyzed the meaning of "capital goods" under the Explanation to Rule 57Q(1). It was established that pollution control equipments are part of the "plant" within the meaning of this term as of the relevant date. The structural items in question were fused to fabricate structural support for pollution control equipments, making them part of the plant. According to Explanation (1)(b), parts of plant, machinery, machines, equipment, etc., used for producing or processing goods are considered capital goods for Modvat purposes. Therefore, capital goods credit was deemed available for the structural items in question. The judgment highlighted that the provisions of Rule 57Q(1) as amended on a later date were not applicable to the period in question, and the original authority's finding that the items were not covered by the Explanation to Rule 57Q(1) was deemed erroneous.

3. Conclusion: The judgment set aside the impugned order and allowed the appeal, emphasizing that the structural items used in fabricating structures to support pollution control equipments were eligible for capital goods credit under the relevant provisions.