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of <h1>Tribunal grants Modvat Credit for capital goods under Rule 57R(2)</h1> <h3>Thuran Spinning Mills Versus CCE</h3> Thuran Spinning Mills Versus CCE - 61 RLT 915 Issues:1. Modvat Credit eligibility on preparatory machines used in the spinning process.2. Interpretation of Rule 57 of Central Excise Rules regarding availment of Modvat Credit.3. Admissibility of Modvat Credit for capital goods used in manufacturing intermediate products.Analysis:1. The appeal concerned the rejection of Modvat Credit eligibility on preparatory machines used in the spinning process. The appellants, engaged in manufacturing Cotton Yarn, claimed Modvat Credit for duty paid on draw frames used in the manufacturing of intermediate products. The Commissioner rejected the claim stating that preparatory products were not specified in the Annexure to Rule 57Q of Central Excise Rules.2. The appellant's consultant referred to a Delhi Bench case and a Southern Bench case where it was held that Modvat Credit is admissible for capital goods used in manufacturing intermediate products. The Delhi Bench emphasized that Rule 57R(2) allows Modvat Credit on capital goods used for intermediate products, even if such products were exempt from duty at the time of manufacturing.3. The Tribunal, after considering previous decisions, upheld the appellant's claim for Modvat Credit. It was noted that Rule 57R(2) does not deny credit for capital goods used in manufacturing intermediate products that are later used in dutiable final products. The Tribunal also cited a circular clarifying that Modvat Credit should not be denied on capital goods used in manufacturing exempt intermediate products that are further used in dutiable finished goods.In conclusion, the Tribunal set aside the Commissioner's order and allowed the appeal, granting consequential relief. The decision was based on the interpretation of Rule 57R(2) and established principles regarding Modvat Credit eligibility for capital goods used in the manufacturing process.
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