1996 (7) TMI 381 - AT - Central Excise

Court rules in favor of appellant in paper-making machine modvat credit eligibility case

The court, led by Judge Shri G.A. Brahma Deva, ruled in favor of the appellant, M/s. BCR Ltd., in a case concerning the eligibility of parts of a paper ... Modvat - Wire and Felt Issues:Eligibility of parts of paper making machine for modvat under Rule 57A of the Central Excise Rules, 1944.Analysis:The judgment involves two appeals filed by M/s. BCR Ltd., concerning the eligibility of parts of a paper making machine for modvat credit under Rule 57A of the Central Excise Rules, 1944. The central issue to be determined is whether items like wire and felt used in the manufacture of paper are eligible for modvat credit.Shri M.P. Devanath, the advocate for the appellant, argued that conflicting decisions existed regarding the eligibility of modvat credit for the inputs in question. He referred to a Larger Bench decision in the case of Union Carbide India Ltd., Calcutta & Ors. v. Collector of Central Excise, which held that certain items like felt, phosphor bronze, and wire cloth used in the manufacture of paper are eligible for modvat credit under Rule 57A.The Assistant Collector had allowed credit on most inputs except wire and felt, stating they were not used in the paper-making process. However, the Collector (Appeals) upheld this decision, noting that wire and felt were necessary for specific tasks in the manufacturing process of paper and fell within the category of apparatus and appliances used in paper production.Shri Deva Nath highlighted that the issue of wire and felt's eligibility had been extensively discussed in the Larger Bench's decision, emphasizing that these items were integral to the paper-making process and should be considered inputs under Rule 57A. He urged the tribunal to follow the precedent set by the Larger Bench.The Departmental Representative, Shri Y.R. Kilania, acknowledged that the Larger Bench had already addressed the issue, conceding to the appellant's argument.Ultimately, the judge, Shri G.A. Brahma Deva, relying on the Larger Bench's decision in the Union Carbide case, concluded that items like wire and felt were not excluded under the explanation to Rule 57A and thus qualified for modvat credit. Consequently, the impugned order was set aside, and both appeals were allowed in favor of the appellant, M/s. BCR Ltd.