TaxTMI 
TaxTMI 
2010 (7) TMI 12
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....ODVAT credit in respect of steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Central Excise Rules, 1944 (for short "the Rules"). 2. Briefly stated, the material facts, giving rise to the present appeal, are as follows: The assessee is a public limited company engaged in the manufacture of yarn. They availed MODVAT credit on "capital goods" described in the Table given below Rule 57Q in respect of steel plates and M.S. channels used by them for erection of chimney for the diesel generating set, falling under Chapter 85 of the Central Excise Tariff Act, 1985 (for short "the Tariff Act"). 3. A show cause notice, dated 20....
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....sessee. The assessee took the matter further in appeal to the Tribunal. The Tribunal has come to the conclusion that since the chimney is used as an accessory to the diesel generating set, and steel plates and M.S. channels were used in the fabrication of chimney these items also fall within the ambit of serial No.5 of the said Table and therefore, MODVAT credit on these items could not be denied. Not being satisfied with the order of the Tribunal, the Revenue is before us in this appeal. 5. Mr. Harish Chandra, learned Senior Counsel appearing for the Revenue submitted that the Tribunal has failed to appreciate that "capital goods" as described in the Table under Rule 57Q would include only those goods which are specified against serial ....
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....n is whether the assessee was right in availing MODVAT credit in respect of the afore-stated items by treating them as "capital goods" in terms of Rule 57Q? 8. Rule 57Q was substituted by Notification No.6/97-C.E. (N.T.) dated 1st March, 1997. It enables the manufacturers of specified goods to claim MODVAT credit of duty paid on capital goods used by them in the factory for manufacture of final product. The Rule, insofar as it is relevant for this case, reads as under: "RULE 57Q. Applicability.- (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the "final products") described in column (3) of the Table given below and to the goods (hereafter, in this section, referred to as "capital goo....
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....uld fall within the purview of serial No.5 of the Table below Rule 57Q. 10. Having examined the question in the light of the language employed in Rule 57Q and the case law on the point, we are of the opinion that the appeal is devoid of any merit. 11. In Jawahar Mills Ltd. (supra), heavily relied upon by the learned counsel for the assessee, the question which came up for consideration was whether the claim of MODVAT credit by some manufacturers in respect of certain items by treating them as capital goods in terms of Rule 57Q was in order. Some of the items under consideration were power cables, capacitors, control panels, cable distribution boards, air compressors, etc. The Court examined the question in the light of the definition ....
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....nd upon the user it is put to. 13. Applying the "user test" on the facts in hand, we have no hesitation in holding that the steel plates and M.S. Channels, used in the fabrication of chimney would fall within the ambit of "capital goods" as contemplated in Rule 57Q. It is not the case of the Revenue that both these items are not required to be used in the fabrication of chimney, which is an integral part of the diesel generating set, particularly when the Pollution Control laws make it mandatory that all plants which emit effluents should be so equipped with apparatus which can reduce or get rid of the effluent gases. Therefore, any equipment used for the said purpose has to be treated as an accessory in terms of serial No.5 of the goods....