NATIONAL ENGINEERING INDUSTRIES LTD. Vs. CCE

JUDGEMENT

(1.) IN these appeals, the short question arising for consideration is whether the following items were eligible capital goods under Rule 57 -Q of the Central Excise Rules, 1944 for the purpose of modvat credit during the period October, 1996 to March 1997:

(2.) I have carefully considered the submissions. I find that, admittedly, the goods in question fell within the exclusionary clauses of Rule 57 -Q w.r.t. to the tariff headings relevant to their classification. However, the claim of the appellants before the lower authorities was that the goods were parts of the capital goods which did not belong to the excluded category. The goods were therefore, eligible for modvat credit under clause (d) of the Explanation to Rule 57 -Q(1) for the period prior to 1.3.1997 and under Sl. No. 5 of the Table to Rule 57 -Q(1) for the period from 1.3.1997. On a perusal of the cited clauses, I find that these clauses were examined by the Board and a clarification was offered in the circular cited by the Counsel. I find that this circular was considered by the lower appellate authority also but that authority apparently has not understood the relevant provisions of the rule in the way the Board understood them. According to the Board's circular, the tariff classification of the parts/components is immaterial. The material consideration is whether the subject goods were parts/components of capital goods eligible for credit under Rule 57 -Q. In the instant case, admittedly, the induction furnace, washing machine and grinding machine fell within the coverage of eligible capital goods under Rule 57 -Q by virtue of their tariff classification. The plea of the assessee that the subject goods were parts/components of these capital goods has not been specifically rejected by the lower appellate authority. It has, therefore, to be inferred that the assessee's plea was accepted by the Commissioner (Appeals) and, that being so, the lower appellate authority ought to have granted the consequential relief of modvat credit to the assessee. The impugned order is, therefore, not sustainable and the same is set aside. The appeals are allowed.