2003 (10) TMI 239 - AT - Central Excise

Goods Excluding Pollution Control Equipment Not Considered Capital Goods under Rule 57Q

The Tribunal upheld the decision that goods, excluding pollution control equipment, did not qualify as capital goods under Rule 57Q. The judgment stressed ... Cenvat/Modvat - Capital goods Issues:Interpretation of Rule 57Q regarding the definition of 'capital goods' for duty utilization on final products.Analysis:In the present case, the main issue revolves around the interpretation of Rule 57Q in relation to the definition of 'capital goods' for the purpose of utilizing duty paid on various goods received in the factory towards payment of duty on the final product. The Commissioner (Appeals) held that the assessee could utilize the duty paid on goods, except pollution control equipment, as they were not considered capital goods under Rule 57Q. The goods in question included parts of electrical installation, quality testing equipment, raw material storage equipment, pipe lines, signalling equipment, and pollution control equipment.Upon analyzing the definition of 'capital goods' as per Rule 57Q, it was observed that the goods in question were not used for producing or processing any goods or bringing about any change in any substance in the manufacture of the final product, except for pollution control equipment. The counsel for the appellant argued that the equipment in question was essential for the manufacturing process, especially in preventing the release of highly toxic substances like sodium cyanide into the atmosphere, which would render the factory dangerous. This argument was supported by a reference to a Supreme Court judgment highlighting the importance of pollution control equipment as an essential and integral part of the manufacturing process.Ultimately, the Tribunal dismissed the appeals, upholding the decision that the goods, except pollution control equipment, did not qualify as capital goods under Rule 57Q. The judgment emphasized the critical role of pollution control equipment in ensuring a safe manufacturing environment and highlighted its significance in the overall production process.