MODVAT credit on kiln parts and refractory material accepted as capital goods under Rule 57Q

MODVAT credit was treated as admissible on the disputed items as capital goods under Rule 57Q because refractory material had already been recognised for capital goods treatment, and the other items such as AC motors, cast air pipes, pinion and rotor air lock valve were found to form parts of the kiln used in manufacture. That factual position was not disputed by the revenue, and the Tribunal relied on the Supreme Court's dismissal of the revenue challenge in Jawahar Mills and its own earlier view in Century Cement. Credit was therefore upheld and the revenue's appeal rejected.

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Issues: Whether MODVAT credit was admissible on the disputed items as capital goods under Rule 57Q of the Central Excise Rules.

Analysis: The disputed items were considered in the light of the settled position that refractory material is entitled to capital goods treatment under Rule 57Q. The Tribunal also noted that the other items, including AC motors, cast air pipes, pinion and rotar air lock valve, formed parts of the kiln used in the manufacturing process, and this factual position was not disputed by the revenue. In view of the Supreme Court's dismissal of the revenue's challenge in Jawahar Mills and the Tribunal's earlier view in Century Cement, no infirmity was found in the order granting credit.

Conclusion: MODVAT credit on the disputed items was held to be admissible as capital goods, and the revenue's appeal was rejected.

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