Modvat credit on steel pipes and refractories was admissible as capital goods, including jetty pipes used for manufacture.

Modvat credit on steel tubes, pipes and refractories used before 23-7-1996 was admissible as capital goods because items covered by clauses (a), (b) and (c) of the Explanation to Rule 57Q(1) were already eligible, and the later specific inclusion by Notification No. 14/96-C.E. (N.T.) did not extinguish that entitlement. The Tribunal also accepted that pipes installed in a jetty away from the factory were eligible where the jetty formed part of the factory plan and the pipes conveyed sea water to the factory for manufacture of the final product. Credit was therefore allowed on the disputed goods, including the jetty pipes.

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Issues: Whether Modvat credit on steel tubes and pipes and refractories used before 23-7-1996 was admissible as capital goods, including steel tubes and pipes installed in a jetty situated away from the factory.

Analysis: The Tribunal held that even before 23-7-1996, the goods covered by clauses (a), (b) and (c) of the explanation to Rule 57Q(1) of the Central Excise Rules, 1944 were capital goods eligible for Modvat credit. The later specific inclusion of such goods by Notification No. 14/96-C.E. (N.T.) did not take away the pre-existing entitlement where the goods were already covered by the earlier clauses. On the jetty issue, the Tribunal accepted the factual finding that the jetty formed part of the factory plan and that the pipes were used for conveying sea water to the factory for manufacture of the final product, making the credit admissible.

Conclusion: Modvat credit on the disputed steel tubes and pipes and refractories was admissible, including the pipes used in the jetty.

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