2004 (4) TMI 232 - AT - Central Excise

Lighting Fittings Eligible for Modvat Credit Under CE Rules

The Appellate Tribunal CESTAT, CHENNAI held that 'Lighting Fittings and parts thereof' were eligible for Modvat credit under Rule 57Q of the CE Rules, ... Cenvat/Modvat - Capital goods Issues:1. Eligibility of goods for Modvat credit under Rule 57Q of the CE Rules, 1944.Analysis:The appeal before the Appellate Tribunal CESTAT, CHENNAI involved a dispute regarding the eligibility of goods for Modvat credit under Rule 57Q of the CE Rules, 1944. The appellants, engaged in the manufacture of Cotton Yarn, had availed Modvat credit on 'Lighting, Fittings and parts thereof' falling under Heading No. 94.05. The Commissioner of Central Excise (Appeals) had held that these goods were not eligible for Modvat credit. The appellants contended that the goods were capital goods for industrial use and essential for their manufacturing process. The Revenue argued that the goods did not qualify as capital goods under the rules as they were not directly involved in the production process. The Tribunal considered the submissions and referred to judgments by the Hon'ble Supreme Court to determine the eligibility of the goods.In the judgment, the Tribunal noted that the goods in question, 'Lighting Fittings and parts thereof,' were crucial for the manufacturing process of the appellants. Referring to the judgment of the Hon'ble Supreme Court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd., it was established that if the production of finished goods would be challenging without the use of certain equipment, such equipment should be considered intended for use in the manufacture of goods. Additionally, the Tribunal cited the judgment in the case of CCE, Coimbatore v. Jawahar Mills, where various items such as power cables, control panels, and electric wires/cables were deemed eligible for Modvat credit as capital goods under Rule 57Q. Following the principles laid down in these judgments, the Tribunal held that the impugned goods were indeed eligible for Modvat credit under Rule 57Q. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with consequential relief, if any.The Tribunal's decision clarified the interpretation of the rules concerning the eligibility of goods for Modvat credit under Rule 57Q. By relying on relevant case law and considering the essential nature of the goods for the manufacturing process, the Tribunal concluded that the goods in question qualified as capital goods eligible for Modvat credit. The judgment serves as a precedent for similar cases involving the classification of goods for availing Modvat credit under the relevant rules.