Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Nova Udyog Ltd. on 23 April, 1996
Equivalent citations: 2003(90)ECC479
ORDER G.A. Brahma Deva, Member (J)
1. These are three appeals filed by the department with reference to the Modvat credit in respect of the items mentioned in the respective impugned orders. These three appeals are being disposed of by this common order.
2. When these matters came up for hearing none appeared on behalf of the respondents. I proceed to pass this order after hearing Shri Ram Saran, learned JDR for the Revenue.
Appeal No. E/1573/95-NB
3. In this appeal, the appellants have filed declaration under Rule 57-1 of the Central Excise Rules; on 25.3.1994 for availing Modvat credit of duty on capital goods namely Foundry Flexes, Electric wire and cables and welding electrodes. Modvat credit has been denied by the Assistant Collector on the ground that these items are not covered by the definition of Capital goods under Rule 57Q. On the other hand, Collector (Appeals) observed that foundry flexes and welding electrodes do not come under the explanation of capital goods as appended with Rule 57Q, whereas Electric Wires and cables are capital goods covered under Rule 57Q. It was the contention of the department that use of electric wires and cables is only to provide supply of electricity and hence, the same cannot be considered as capital goods.
4. As per explanation of the capital goods with reference to Rule 57Q, it has been stated that capital goods means -
(a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products;
(b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and
(c) ...........
In view of the wider meaning and enlarged definition of the capital goods, as can be seen from the explanation, it is clear that not only machines which are bringing about any change but also components and accessories of the above machines used for the above purpose are capital goods. In view of the wider wordings, it is clear that wires and cables are capital goods as covered tinder Rules 57Q and, accordingly, the view expressed by the Collector (Appeals) is correct and in the result, the department fails on this issue.
Appeal No. E/1574/95-NB
5. The dispute is in respect of the Modvat credit. Modvat credit has been denied on E.O.T. cranes on the ground that these cranes are used inside the factory for shifting materials from one place to another and accordingly, it is not capital goods. Collector (Appeals) has accepted the plea of the appellants holding that E.O.T. crane is machine used for processing of goods and, therefore, fall within the definition of capital goods. It was contended on behalf of the Revenue that Collector (Appeals) erred in holding that it is capital goods because of the fact that the Tribunal in the case of Tola Engineering & Locomotive Co., Ltd., v. Collector of Central Excise, Pune, 1994 (70) ELT 75 (Tribunal) while deciding the admissibility of Notification No. 217/.86-C.E. has clearly held that material handling equipments do not come under the definition of machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. It was contended by the Departmental Representative that on the same analogy, item in question cannot be treated as capital goods. It was submitted on behalf of the respondents that these E.O.T. cranes are lifting cranes which are installed permanently inside the shed and are moving to and fro throughout the length of the shed and in this process E.O.T. cranes help in shifting the raw-material to the furnace and feeding liquid molten metal, semi-finished, finished products etc. to various places inside the shed and transfer of despatch. They also relied upon the decision of the Supreme Court in the case of Collector of Central Excise v. Rajasthan State Chemical Works, 1991 (31) ECC 459 (SC): 1991 (55) ELT 444 (SC) wherein it was held that the use of any process in or in relation to manufacture to include use of power in handling raw materials prior to commencement of actual processing and plea of such handling operation not bringing about any change in the raw material not tenable with reference to Notification No. 179/77-CE.
6. In the present case, we are concerned with the E.O.T. crane which has been used for movement of raw material. In view of the wider definition of the capital goods under Rule 57Q, it is clear that not only items which are bringing about change but also components and accessories which help or assist in the process of manufacture can be considered as capital goods. Accordingly, the Collector (Appeals) was right in holding that item in question is capital goods. Party succeeds on this issue. Appeal No. E/1576/95-NB
7. Modvat credit has been disallowed by the Assistant Collector on the ground that Central Excise Law as on date read with Notification No. 16/94-CEfNT), dated 30.3.1994 did not permit availment of Modvat credit on the basis of any GP-1 issued on 1.4.1994. In this case party has availed Modvat credit on the inputs namely Hot Briquetted Iron on the five gate passes dated 1.4.1994. Collector (Appeals) accepted the plea of the party observing that the process of issue of gate passes had been started on the midnight of 31.3.1994 and duty in PLA has also been deposited on the same date, the movement of goods have actually started on the early hours of the following day. The process of issue of gate pass was thus culminated on the first hours of 1.4.1994. He observed that when the duty has been paid on the inputs on 31.3.1994, the gate pass should be deemed as if issued on the said date.
8. In the case of Phoenix Metals & Alloys P. Ltd. v. Commissioner of Central Excise, Bombay-I, 1996 (83) ELT 393, the Tribunal has held that Modvat credit should not have been denied without considering the invoices with reference to the availment of the Modvat credit. In the present case, the Collector (Appeals) has observed that when the duty has been paid on the inputs on 31.3.1994 the gate pass should be deemed as if issued on the same date. It is not clear from the fact whether the department has examined the gate pass and invoices to ascertain the factual position with reference to the payment of duty. Accordingly, I am of the view that this issue requires reconsideration. I am remanding the matter to the concerned Assistant Commissioner on this limited issue in this appeal to examine that is the duty has already been suffered and subject to examination of the relevant documents, he may pass suitable order after providing an opportunity to the appellants. Thus, Appeal No. E/1576/95-NB is allowed by way of remand.