2022 (9) TMI 1456 - SC - Central Excise

Supreme Court Allows Modvat Credit for Diesel Generating Power Plant Components

The Supreme Court affirmed the High Court's decision to allow Modvat credit on parts, components, and accessories of Diesel Generating Power Plant sets to ... MODVAT Credit - parts, components and accessories of Diesel Generating Power Plant [DGPP] sets - HELD THAT:- On appreciation of evidence and considering the material on record, the High Court has specifically observed and found that DGPP sets on which Modvat credit is allowed is part and parcel of the factory of the respondent which is ultimately used in the manufacture of end product – cement. Therefore, Sl. No.5 of the Table appended to Rule 57Q shall be attracted and therefore the assessee shall be entitled to the Modvat credit on such DGPP sets being parts/components of the cement plant/final manufacture product. Appeal dismissed. Issues:- Modvat credit on parts, components, and accessories of Diesel Generating Power Plant (DGPP) sets.Analysis:The Supreme Court, comprising M.R. Shah and Krishna Murari JJ., granted leave in Special Leave Petition (C) Nos. 28817/2011 and 28811/2011. The central issue before the Court was whether the High Court/Tribunal were correct in allowing Modvat credit on parts, components, and accessories of DGPP sets to the assessee. The Court considered the contention presented by Mr. N. Venkataraman, learned ASG for the Revenue, and Mr. V. Sridharan, learned Senior Advocate for the respondents.Upon evaluation of the evidence and the material on record, the High Court's findings were crucial. The High Court observed that the DGPP sets, on which Modvat credit was permitted, formed an integral part of the respondent's factory and were ultimately utilized in the manufacturing process of the end product, i.e., cement. Consequently, the Court noted that as per Sl. No.5 of the Table appended to Rule 57Q, the assessee was entitled to Modvat credit on these DGPP sets since they were considered parts/components of the cement plant or the final manufactured product.In light of the High Court's detailed examination and conclusion, the Supreme Court found no reason to interfere with the decision. Therefore, the Court dismissed all the appeals, affirming the allowance of Modvat credit on the parts, components, and accessories of the Diesel Generating Power Plant sets to the assessee.