1997 (11) TMI 182 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit in certain capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis:
The judgment dealt with the appeal arising from an Order of the Collector of Central Excise, Chandigarh, regarding the reversal of Modvat credit for specific capital goods. The Collector allowed Modvat credit on certain items but denied it on others. The eligibility for Modvat credit was discussed for various items categorized as capital goods under Rule 57Q.

1. Copper, Aluminium, PVC cables: The appellants claimed that these cables are essential components of machinery/equipment used in cement manufacturing. Referring to a previous decision, it was held that electric wires and cables are eligible capital goods. Modvat credit was allowed for these items under Rule 57Q.

2. Scientific Instruments: Scientific instruments like RTDS and thermocouples were deemed essential for monitoring and controlling temperatures in the cement manufacturing process. Citing a previous case, it was established that such instruments are eligible for Modvat credit as they are integral to the main machinery.

3. Distribution Control System: The DCS was argued to be a crucial component controlling processing equipment in cement factories. Drawing from a previous ruling, it was determined that DCS functions as switches for machinery, making it eligible for Modvat credit under Rule 57Q.

4. Rupture Disc: The function of rupture discs as safety devices was acknowledged, but they were not considered part of machinery/equipment bringing about a change in the final product. Therefore, rupture discs were not deemed eligible for Modvat credit under Rule 57Q.

5. Filter Bags: Filter bags were explained to be vital for maintaining pressure levels during cement manufacturing. Contrary to a previous decision, it was held that filter bags qualify as equipment for processing goods and are eligible for Modvat credit under Rule 57Q.

6. Static Convertors: Static convertors, regulating speed in various processes within the kiln, were argued to be essential for cement manufacturing machinery. Their role as part of a variable speed drive was crucial, leading to the conclusion that static convertors are admissible for Modvat credit under Rule 57Q.

In conclusion, Modvat credit was allowed for all items except rupture discs. The impugned order was modified accordingly, granting consequential benefits to the appellants as per the law.