2007 (11) TMI 177 - AT - Central Excise

Tribunal ruling on capital goods credit eligibility for accessories and spares

The Tribunal allowed capital goods credit for accessories to DG sets but denied the benefit for spare parts related to specific machinery and other items ... To determine capital goods credit on Surface Miner and Spares therefor, it requires to be established that the limestone mines, in which these items were used, are captive mines – matter is remanded to verify the above fact - As regards accessories to DG sets, we note that DG set has been accepted as part of the plant and machinery u/not. 11/95 so CG credit allowed – CG credit not admissible in respect of spare parts for road milling machine & other spare parts like screws, clip plates etc Issues:Whether capital goods credit is admissible for specific items under Rule 57Q of the Central Excise Rules, 1944.Analysis:The appeal in question revolves around the admissibility of capital goods credit for six specific items received by the appellants in their factory. The lower appellate authority had denied this benefit for these items, including a Surface Miner, accessories to a DG set, spares for various machinery, and a Disc grinding Mill. The appellants argued that the items were used in connection with mining or manufacturing activities and should be eligible for credit based on relevant legal provisions and precedents.The Tribunal considered each item individually. For the Surface Miner and its spares, the crucial aspect was whether the limestone mines where they were used were captive mines. Since this fact was not established by the lower authorities, a definitive decision on the admissibility of credit for these items was deferred pending further verification. However, the Tribunal did acknowledge that accessories to the DG set were eligible for capital goods credit under Rule 57Q, as electric generating sets were explicitly mentioned for such benefits.Regarding spare parts for the road milling machine and other items like screws and clip plates, the Tribunal found them ineligible for capital goods credit under the relevant provisions amended by specific notifications. The classification of these items under Heading 84.31 rendered them ineligible for the credit, as per the rules in force at the time of their receipt in the factory.In conclusion, the Tribunal allowed capital goods credit for accessories to DG sets but denied the benefit for spare parts related to specific machinery and other items classified under Heading 84.31. The decision on the Surface Miner and its spares was deferred pending verification of their use in captive mines. The appeal was disposed of with these determinations, emphasizing the need for further investigation into the specific circumstances surrounding the contested items to ascertain their eligibility for capital goods credit.