2006 (7) TMI 455

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..... er authorities issued a show cause notice alleging that the credit is inadmissible as per rule 57Q as was in existence during the relevant period. Respondent contested the show cause notice on the ground that the said chilling plant is a necessity for the manufacturing of their final products i.e. bulk drugs and without the chilling plant there would be no final products. Adjudicating authority confirmed the demand on the ground that the parts of chilling plant were classified under chapter heading no. 84.15 and hence excluded by the rule itself. On an appeal the Commissioner (Appeals) allowed the appeal. 3. Learned DR submits that the credit availed by the respondent is not in order in as much that the parts of chilling plant falls under .....

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..... iled during the period July, 1996 March, 2001 and that the parts were covered under chapter heading No. 84.15. During the relevant period provisions of Rule 57Q of the Central Excise Rules, 1944 governed the eligibility of the Modvat credit on capital goods. It is necessary to refer to the said rule that I may read: 57Q. (1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the final products ) for the purpose of allowing credit of specified duty paid on the capital goods used by the manufacturer in his factory and for utilising the credit so allowed towards payment of duty of excise leviable on the final products, or as the case may be, .....

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..... solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and airconditioning appliances and machinery); (b) ............ (c) ........ (d) ..... ... (e) ... ...... (f) ............. (g) ......... (h) ............. A plain reading of the said rule will indicate that the lawmakers intended to grant Modvat credit on the capital goods if those items were covered under rule 57Q. It can be seen that the Explanation defines the capital goods, and sub-clause (a) specifically excludes the eligibility of the Modvat Credit on the machinery falling under chapter heading No. 84.15. It would mean that even if any machinery is vital for the manufacture of final products, if it f .....

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