Customs, Excise and Gold Tribunal - Delhi
Saraswati Sugar Mills vs Cce on 10 December, 2002
Equivalent citations: 2003(87)ECC203, 2003(160)ELT440(TRI-DEL)
JUDGMENT
V.K. Agrawal, Member (Tech)
1. In this appeal filed by M/s. Saraswati Sugar Mills, the issue involved is whether the benefit of Notification No. 67/95-CE is available to the appellants in respect of iron and steel structures manufactured by them and used captively within the factory.
2. Shri B.L. Narasimhan, Ld. Advocate, submitted that the appellants manufacture sugar and molasses; that they decided in 1999 to modernize the process of manufacture; that for modernizing the process they have to replace sugar manufacturing machinery and its accessories; that some items were manufactured by the appellant themselves and some were procured alongwith the machinery from outside sources; that in respect of goods manufactured by them, they claimed the benefit of the Notification No. 67/95-CE dated 16.3.95 which has been denied to them by the Revenue on the ground that the steel structures from the part of the building. He, further, submitted that during the process of modernization they have installed various sugar manufacturing equipments like evaporators, pans, clarifiers, centrifugals etc. which cannot be used on its own for manufacture of sugar and molasses; that the said machineries have to be supported by goods like steel platform, ladders, juice sheeters and pan; that these are not building material as without these structures various machineries would not function. He relied upon the decision iu the case of Bhanu Steels (P) Ltd. v. CCE, Delhi, 2002 (51) RLT281, wherein it has been held that former, iron bottom plate and cash iron central column are eligible capital goods under Rule 57Q of the Central Excise Rules, 1944. Reliance has also been placed on the decision in the case of Simbhaoli Sugar Mills Ltd. v. CCE, Meerut, 2001 (135) ELT 1239, wherein the Modvat credit has been allowed in respect of HR plates and shapes and sections, chequered, plates and ITR plates; that the appeal filed by the Revenue was dismissed by the Supreme Court on merits as reported in 2002 (139) ELT (A-294). He further mentioned that the Tribunal has observed in the said decision that if the material is used for raising structure to support the various parts of machine, they would be covered by the Explanation to Rule 57Q. He has also relied upon the decision in the case of Global Sugar Ltd. v. CCE, Kanpur, 2000 (119) ELT 611 (T). The Ld. Advocate, alternatively, submitted that all the impugned goods have been fabricated at site and as such are classifiable under Sub-heading 7308.50 of the Schedule to the Central Excise Tariff Act which attracts Nil rate of duty; that the goods fabricated at site are not excisable as held by the Supreme Court in the case of CCE, Nagpur v. Wainganga Sahkari S, Karkhana Ltd., 2002 (82) ECC 457 (SO : 2002 (50) RLT 125 (SC). Finally he submitted that no penalty is imposable, as they have not evaded payment of Central Excise duty as they had claimed the benefit of Notification No. 67/95.
3. Counteringthe arguments, Shri Jagdish Singh, Ld. DR, submitted that while considering the eligibility of Modvat credit each and every case has to be decided on its own merits; that the appellants themselves have classified impugned products under Sub-heading 7308.90 of the Schedule to the Central Excise Tariff Act and not as goods fabricated at site of work for use in construction work classifiable under sub-heading 7308.50; that the decision in the case of Wainganga Sahkari S. Karkhana Ltd. is not applicable as all these goods have been manufactured in their factory and these are not immovable goods; that the goods under consideration in Wainganga case were trusses, columns and purlines which were fabricated at site and the Hon'ble Supreme Court has referred to the decision in the case of Aruna Industries Vishakhapatnam and Ors. v. CCE, vis-a-vis the decision in the case of Richardson and Cruddas (1972) Ltd. v. Collector of Central Excise, 1986 (25) ELT 580 and 1988 (38) ELT 176 respectively. He further submitted that benefit of Notification No. 67/95 would be applicable only to those goods which are either inputs or capital goods as defined in Rule 57Q of the Central Excise Rules. The goods in questions are iron and steel structures which are neither parts nor components nor accessories of the machines; that accordingly the benefit of Notification No. 67/95 has been rightly denied to them. He relied upon the decision in the case of Rosa Sugar Works v. CCE, Kanpur, 1999 (114) ELT 950 (T). Finally he mentioned that a penalty of only Rs. 5 lakhs has been imposed in a case where the appellants have used the goods involving duty more than Rs. 28 lakhs and as such the penalty is not at all excessive.
4. We have considered the submissions of both the sides. The Ld. Advocate had shown us certain photographs where the impugned structures were used. According to him these structures form integral part of the machinery concerned without which the machinery cannot function. On query from the Bench, the Ld. Advocate has fairly conceded that the various machineries, which have been purchased by them, were complete. Accordingly, we do not find any substance in his submissions that these structures are components of the various machine/machineries. Notification No. 67/95-CE provides exemption from payment of duty to the capital goods as defined in Rule 57Q if they are used in or in relation to the final products which are chargeable to duty. The appellants have not succeeded in establishing that the impugned structures are components of the capital goods as specified in the table below Rule 57Q of the Central Excise Rules. Chapter 73 of the Central Excise Tariff under which the impugned goods fall has also not been specified in the table below Rule 57Q. The ratio of the decision in the case of Bhanu Steels is not applicable as therein the appellants had explained that the goods were spare parts for plant and machinery installed in their factory. In the present matter, the appellants have not proved that the impugned goods are components of the machines/machineries. The ratio of the decision in the case of Wainganga in not applicable as the goods were manufactured in the factory and further these were not trusses, columns and purlines as was the fact in the Wainganga case. We, therefore, hold that the benefit of Notification No. 67/95 is not available on appellants. Accordingly, we uphold the demand of duty of Excise confirmed against them. However, taking into consideration the facts and circumstances of the case, we are of the view that the penalty imposed is on the higher side and the interest of justice will be met, if the appellants are directed to pay a penalty of only Rs. 1 lakh. We order accordingly. The appeal is thus partly allowed.