D.K. Jain, J. - (1.) Challenge in this appeal, by special leave, is to the order dated 11th June, 2002 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (for short "the Tribunal"), as it existed then, in Appeal No. E/725/2001-NB(SM). By the impugned order, the Tribunal has held that the respondent (for short "the assessee") is entitled to avail of MODVAT 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 20th August 1999, was issued to the assessee, alleging therein that MODVAT credit availed of on steel plates and M.S. channels used in the fabrication of chimney, was inadmissible as the subject items were not "capital goods", as described in the said Table. Therefore, MODVAT credit had been wrongly availed of by the assessee. In reply to the show cause notice, the assessee pleaded that the items in question being components of chimney which in turn was an accessory of the diesel generating set, falling under heading 85.02, they also qualify the test of "capital goods" specified against serial No. 5 of the Table, and therefore, MODVAT credit in respect of the said items was clearly admissible. It was asserted that chimney was a vital part of the generating set for discharge of gases arising out of burnt fuel, mandatory under the Pollution Control Laws.;