DHAR TEXTILES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) MODVAT credit of Rs. 67,31,632/ - taken by the appellants herein (who are manufacturers of textiles falling under Chapter Headings 52, 50, 60, 61 and 63), prior to 23 -7 -1996, has been disallowed on the ground that such credit had been taken prior to installation of the goods in the factory and commencement of production, in contravention of Rule 57Q(2) of the Central Excise Rules, 1944.

(2.) THE Adjudicating authority has however, held that credit would become available for utilisation after installation of machinery and commencement of production. The above mentioned amount includes an amount of Rs. 8,17,006/ - taken on goods like Insulated wires and cables, Air -Conditioners, Electric Motors, Electric Apparatus, Parts of Cooling tower and Steel tanks and vessels, which has been disallowed totally i.e. this credit has been held to be inadmissible even after commencement of production, reason being that the items'above mentioned do not qualify as capital goods in terms of Rule 57Q. A further sum of Rs. 7,96,675/ - (also included in the amount of Rs. 67,31,632/ -) has been disallowed totally on the ground that it has been taken on capital goods which are exclusively used for manufacture of goods falling under Chapter 52 which came to be specified as final products under Rule 57Q only on 23 -7 -1996. In addition, a penalty of Rs. 1,50,000/ - has been imposed on the appellants. Hence this appeal.

(3.) WE have heard both the sides. Credit of Rs. 8,17,006/ - is admissible in the light of the Tribunal's decisions listed below in which it has been held that the items on which the above mentioned amount of credit has been denied, are capital goods and entitled to credit: