1997 (3) TMI 263 - AT - Central Excise

Tribunal grants Modvat credit for steel-making components as essential parts

The Tribunal ruled in favor of the appellant, holding that refractories and binding accessories used in steel making were eligible for Modvat credit under ... Modvat Issues:The judgment involves challenges against orders-in-original confirming demands made in show cause notices regarding the eligibility of Modvat credit for refractories and binding accessories used in steel making under Rule 57Q of the Central Excise Rules, 1944.Details of the Judgment:The appellant, engaged in manufacturing steel billets, availed Modvat credit for refractories and binding accessories used in steel making. The Commissioner held that these items were not eligible inputs under Rule 57Q as they did not fall under the definition of capital goods. The appellant contested this decision, arguing that refractories should be considered capital goods based on previous Tribunal decisions and that the furnace, including its parts like refractories, should be eligible for Modvat credit under Rule 57A.The Commissioner's orders stated that refractories and binding accessories were not capital goods as they were used for maintenance, not production or processing. The appellant argued that refractories were essential parts of the furnace and should be eligible for Modvat credit under Rule 57A. The Tribunal noted previous decisions where refractories were considered parts of machinery and equipment, supporting the appellant's position.The Tribunal overruled the Commissioner's decision, stating that refractories, being parts of the furnace, were eligible for Modvat credit under Rule 57A. The Tribunal also addressed the issue of the appellant not filing the required declaration under Rule 57G(1) but held that, given the circumstances and previous Tribunal decisions, the Modvat benefit under Rule 57A should be granted to the appellant.In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, ruling in favor of the appellant's eligibility for Modvat credit for refractories and binding accessories used in steel making.