Appeals on Modvat credit for chlorine tonners and texturised yarn inputs dismissed; Revenue's claims rejected.

The appeals by the Revenue in the cases involving eligibility of Modvat credit on chlorine tonners and Modvatability of inputs for texturised yarn were dismissed. The issue of Modvat credit on chlorine tonners was settled by a Larger Bench decision affirmed by the Supreme Court, upholding the eligibility of such capital goods for credit. Similarly, based on precedent, the appeals regarding Modvatability of inputs for texturised yarn were rejected, emphasizing that packaging materials should be considered in the assessable value. In conclusion, all appeals brought by the Revenue were deemed meritless and dismissed.

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Appeals by Revenue challenged allowance of Modvat credit on chlorine tonners (storage containers/cylinders) and on inputs like paper tube and antistatic oil. The Tribunal upheld the adjudicating authority and Commissioner (Appeals) that "components, spares and accessories used in the plant and machinery are admissible for modvat credit," but held chlorine tonners are not such components: "Tonners are not part (or essential part) of the Reactor Machinery" and "Manufacturing will take place even if chlorine is not stored in Chlorine Tonner." Credit was particularly considered under the pre-23-7-96 definition of capital goods, where tonners were neither directly nor indirectly used in manufacture of final product. Revenue produced no persuasive evidence to displace the finding, and the issue is further governed by the Larger Bench decision in Jawahar Mills (confirmed by the Supreme Court). Identical reasoning applied to paper tube and antistatic oil in texturised-yarn cases, with earlier Tribunal precedent rejecting Revenue's contention; all Revenue appeals were therefore dismissed.

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