2004 (12) TMI 113 - AT - Central Excise

Appeal allowed: Modvat credit for water pipelines to factory for manufacturing.

The Tribunal allowed the appeal in favor of the appellants, holding that Modvat credit is permissible on pipelines used to carry water to the factory for ... Cenvat/Modvat Issues Involved: Whether Cenvat credit is allowable on a pipeline used for carrying water from a reservoir to the factory for manufacturing finished products during the period of 1996-1997.Summary:The appellant argued that based on precedents like CCE, Chennai v. Pepsico India Holdings Ltd. and J.K. Udaipur Udyog Ltd. v. CCE, Jaipur-II, where Modvat credit was allowed for similar situations, they should be eligible for Modvat credit on the pipes and tubes used for transferring water to the factory. The Revenue contended that since the water source was 5/6 kms away from the factory and a major portion of the pipeline was outside the factory, credit should not be granted. The Tribunal, after considering the arguments, held that as long as one end of the pipeline is within the factory and the water is utilized for manufacturing finished goods within the factory, Modvat credit is permissible. Therefore, the appeal was allowed in favor of the appellants.This judgment reaffirms the principle that the location of the water source in relation to the factory does not affect the eligibility for Modvat credit as long as the water is used within the factory for manufacturing purposes. The decision is in line with previous Tribunal rulings and provides clarity on the admissibility of credit for pipelines used to transport essential materials for production.