2007 (10) TMI 671 - HC - Central Excise

Bombay HC affirms Tribunal's ruling on modvat credit eligibility for capital goods

The Bombay High Court upheld the Tribunal's decision, affirming the eligibility of modvat credit on cement, steel plates, and bars as capital goods under ... CENVAT/MODVAT credit - capital goods - cement - steel bars - waste - rule 57(U) of the Central Excise Rules, 1944 - Held that: - the cement, steel plates and bars in respect of which modvat credit has been availed of by respondent no.2 have been used for providing support to machines - decided against Revenue. Issues:1. Eligibility of modvat credit on cement, steel plates, and bars under Rule 57 Q of the Central Excise Rules, 1944.Analysis:The judgment by the Bombay High Court addressed the issue of eligibility of modvat credit on cement, steel plates, and bars under Rule 57 Q of the Central Excise Rules, 1944. The case involved a company engaged in manufacturing iron and steel products that availed modvat credit on various capital goods. The Commissioner of Central Excise issued a notice questioning the admissibility of credit on certain items and subsequently disallowed the modvat credit, imposing penalties. The company appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which relied on the definition of capital goods from a Supreme Court judgment to allow the credit. The Assistant Solicitor General representing the revenue argued that the items in question did not qualify as capital goods under Rule 57 Q. He cited various judgments to support his contention.The Senior Counsel for the company argued that the revenue had conceded similar cases in the past and cited relevant court orders to support this claim. He emphasized that the items were used in constructing a platform for machinery installation, making them eligible for modvat credit as capital goods. He referenced Rule 57 Q to support the Tribunal's decision. The High Court analyzed the submissions from both parties along with the relevant judgments. It noted that the issue was covered by a Supreme Court judgment that defined capital goods broadly to include items used for production or processing. The Court highlighted the liberal language of the explanation and the importance of factual findings by the Tribunal. The High Court found no illegality in the Tribunal's decision and rejected the references, stating that no substantial question of law was involved, primarily due to the clear precedent set by the Supreme Court judgment.In conclusion, the Bombay High Court upheld the Tribunal's decision regarding the eligibility of modvat credit on cement, steel plates, and bars as capital goods under Rule 57 Q of the Central Excise Rules, 1944. The judgment emphasized the broad definition of capital goods and the importance of factual findings in determining eligibility for such credits.