2021 (5) TMI 606

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....chapter 78, for the period April 2005 to January 2010. Central Excise duty demand of Rs. 54,77,556 (incl. cess) has accordingly been confirmed along with interest and equivalent amount of penalty. 2. The facts of the case in brief are that the appellant is engaged in the manufacture of Viscose Rayon Filament Yarn, Cellophane and Sulphuric acid on which central excise duty is being paid. The goods on which credit has been denied are lead and articles thereof, viz, lead ingot, lead dross and lead sheet. The said goods have been used by the appellant to channelize sulphuric acid in the manufacturing process. The said channels are made of steel, coated with lead from inside. The lead coating gets corroded gradually and the said goods are used ....

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....ion of the Hon'ble Rajasthan High Court in the case of UOI vs. Hindustan Zinc Ltd. 2007 (214) ELT 510 (Raj). The appeal filed by Department against the said decision has been dismissed by the Apex Court reported in 2007 (214) ELT A 115. It has also been contended that credit is otherwise eligible on disputed items as 'input'. The demand has also been contested on grounds of limitation in absence of fraud or suppression. On same count, imposition of penalty has also been disputed. 6. We find that the goods in question have been used in the repair and maintenance which is not in dispute and the same has been duly recorded by the Ld. Commissioner in para 5.4 of the impugned order in page no. 14. After taking note of the diagram and photograph....

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....intenance, the principal plant and machinery cannot function properly. Use of such capital goods is essential for smooth running of plant with greater efficiency. In other words, the goods in question are essential supplement to the plant and machinery for use in manufacturing goods, for its greater efficiency and better results and thus, it is an integral part of the process with which the primary machines are engaged. Looked from these aspects, there is no impediment for the goods in question qualifying as capital goods eligible for Modvat credit. 4. Consequently, such goods which are necessary for running of plant and up-keeping of the machinery directly involved in the manufacturing and products were held to be eligible to avail Modva....