1999 (12) TMI 453 - AT - Central Excise

Summary

Issues:
- Modvat credit eligibility for handling equipment like padestrian staker, Fork Lift Truck, and Hydraulic Pellet Truck.
- Exclusion of Battery Charger and Surface Grinder from Modvat credit.
- Interpretation of whether handling equipment qualifies as capital goods in the manufacturing process.

Modvat Credit Eligibility for Handling Equipment:
The appeal addressed the eligibility of Modvat credit for handling equipment like padestrian staker, Fork Lift Truck, and Hydraulic Pellet Truck used in the manufacturing process. The Commissioner allowed the credit for these items based on their usage in handling raw materials, considering them as capital goods. The appellant sought a reversal of this decision, citing a pending reference application. The Tribunal noted the consistent view in various judgments, including the application of the principle established in the Rajasthan State Chemical Works case. The Tribunal rejected the appeal, emphasizing that handling equipment used in the manufacturing process qualifies for Modvat credit.

Exclusion of Battery Charger and Surface Grinder:
The judgment also highlighted the exclusion of the Battery Charger and Surface Grinder from Modvat credit eligibility. The Commissioner did not grant benefits for the Battery Charger, which was not appealed by the assessee. Similarly, the Surface Grinder, used for maintenance and sharpening of blades, was deemed ineligible for Modvat credit. The respondents did not challenge these exclusions, and the Tribunal did not address these items in the appeal.

Interpretation of Handling Equipment as Capital Goods:
The Advocate for the respondents argued that handling equipment, like the items in question, should be considered as part of the manufacturing process based on established legal precedents. Citing judgments such as J.K. Pharmachem Ltd. and Century Cements Ltd., the Advocate emphasized that handling raw materials is integral to the manufacturing process. The Tribunal concurred with this interpretation, referencing the Rajasthan State Chemical Works case and the consistent application of this principle in various judgments. The Tribunal distinguished the Velathal Spinning Mills Ltd. case cited by the Revenue, affirming that handling equipment qualifies as capital goods in the manufacturing process. Consequently, the appeal was rejected based on the established legal principles and precedents.

This comprehensive analysis of the judgment addresses the issues surrounding Modvat credit eligibility for handling equipment, the exclusion of specific items, and the interpretation of handling equipment as capital goods in the manufacturing process.