Appellant granted Modvat credit for factory accessories, parts, and components.

The appellant appealed against the disallowance of Modvat credit for specific items including High temperature colour close circuit TV, mechanical interlock, and assembled expansion joints. The Tribunal found that these items were used as accessories, parts, or components of specified goods in the factory, entitling the appellant to the Modvat credit. The impugned order disallowing the credit was set aside, and the appeal was allowed.

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Issues:
1. Disallowance of Modvat credit for specific items - High temperature colour close circuit TV, mechanical interlock, assembled expansion joints.

Analysis:
The appellant appealed against the Order-in-appeal disallowing Modvat credit for certain items. Firstly, regarding the High temperature colour close circuit TV, the appellant argued that it is used as an accessory with a kiln for monitoring burning conditions, classifiable under chapter Heading 8474.10. They claimed entitlement to credit as per the definition of capital goods under Rule 57Q. Similarly, for the mechanical interlock, the appellant contended it is a part of pollution control equipment essential for running the cement plant. The interlock separates dust particles from fuel gas and, being part of pollution control equipment, should be considered as capital goods. Lastly, the assembled expansion joints were argued to be used as parts of ducts in the plant for carrying steam to various areas. The appellant asserted that since the joints are part of the ducts, they qualify for the benefit of capital goods.

On the other hand, the revenue disputed the classification of the High temperature colour close circuit TV under Heading 8528 of the tariff, not specified under Rule 57Q, and made similar contentions for the other items in question. However, it was noted that the revenue did not dispute the usage of these items in the factory. Rule 57Q stipulates that specified goods used in the factory are eligible for capital goods benefits, including accessories, components, parts, and specified goods. The Tribunal found that the High temperature colour close circuit TV, mechanical interlock, and assembled expansion joints were indeed used as accessories, parts, or components of specified goods in the factory. Therefore, the appellant was deemed entitled to the Modvat credit for all these items. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed. The judgment was dictated and pronounced in open court.

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