2001 (6) TMI 155 - AT - Central Excise

Interpreting Rule 57Q: Clarification on Credit Eligibility for Specific Articles

The case involved interpreting Rule 57Q of the Central Excise Rules, 1944 regarding the availability of credit on specific articles. The dispute centered ... Modvat/Cenvat - Modvat on capital goods Issues involved: Interpretation of Rule 57Q of the Central Excise Rules, 1944 regarding availability of credit on certain articles.Summary:1. The dispute in this case revolves around the availability of credit on various articles under Rule 57Q of the Central Excise Rules, 1944. The denial of credit on Fire Extinguishers and consumables like Samot Powder and adhesives is not strongly contested. However, the denial of credit on M.S. Rod, beam, channel, and angles used as support for the furnace is challenged based on a previous Tribunal decision. The Tribunal's earlier decision on steel structures not being component parts of accessories is considered, but it is noted that this decision was made on a stay application and lacks precedential value. A subsequent decision is cited where similar goods were deemed eligible for credit in identical circumstances.2. The distinction between Modvat credit on capital goods and inputs is highlighted. For Modvat credit on inputs under Rule 57Q, two conditions must be met: the inputs must be used in manufacturing final goods, and those final goods must be cleared on payment of duty. The interpretation of Rule 57Q is discussed, emphasizing that it allows for not only complete machinery but also components, spares, and accessories of machinery, including supporting materials for machinery like pipes and tubes used to convey input goods. The Commissioner's error in denying credit amounting to Rs. 24,673.40 is noted, and the appeal is allowed in this regard. However, the denial of credit to the extent of Rs. 1,737 is upheld. Additionally, as there were no grounds for imposing a penalty, the penalty is remitted in full, and appropriate relief is granted.This judgment clarifies the application of Rule 57Q in the context of claiming credit on various articles used in manufacturing processes, emphasizing the eligibility criteria and the Commissioner's error in denying credit in certain instances.