Customs, Excise and Gold Tribunal - Delhi
M/S. Nahar Spinning Mills vs Cce, Bhopal on 16 January, 2001
Equivalent citations: 2002(149)ELT498(TRI-DEL)
ORDER
P.G. Chacko
1. The appellants are manufactures of cotton and blended yarn falling under Chapters 52 and 55 of the Schedule to the Central Excise Tariff Act and are availing the facility of modvat credit on inputs and capital goods under Rules 57A and 57Q of the Central Excise Rules. During the period February to April 1997, they took modvat credit of the duty paid on certain goods which were claimed to be either inputs or capital goods covered by Rule 57A or Rule 57Q, as the case may be. Among such goods were lubricating oils which were claimed to be inputs and computer hardware which were claimed to be capital goods. The modvat credit taken on these goods were disallowed by the adjudicating authority, who also imposed a penalty of Rs.5,000/- on the party.The order of the adjudicating authority was upheld by the Commissioner (Appeals) in the appeal filed by the assessees. Hence the present appeal of the assessees before the Tribunal .
2. Today there is no representation for the appellants in spite of notice. The Revenue is represented by Ld. SDR Sh.Bheema Shankar.
3. I have carefully examined the records. I find that both the lower authorities disallowed the modvat credits taken on lubricants (as inputs) and computer hardware (as capital goods) on the ground that the goods did not quality to be inputs or capital goods, as the case may be, under the provisions of Rule 57A or Rule 57Q, as the case may be. As regards lubricants, the lower appellate authority found that the lubricants were used for maintenance and smooth running of machinery (capital goods) and, therefore, could not be treated as the same were not used in relation to he manufacture of final products. According to that authority, any goods used for maintenance of capital goods would not qualify as inputs used in relation to the manufacture of final products. Regarding modvat credit on computer hardware, it was found that the goods were in the excluded category of capital goods under Rule 57Q inasmuch as they fell under Chapter Headings 84.71 and 84.73 and, therefore, it was held that such goods were not eligible for capital goods credit under Rule 57Q.
4. Ld. SDR submits that the department's allegation of erroneous availment of modvat credit on computer hardware by the appellants was not even attampted to be denied by them in their reply to the show-cause notice. He further submits that the computer hardware in question were covered by Chapter Headings 84.71 and 84.73 of the Central Excise Tariff and the same stood excluded from the category of modvatable capital goods as per Sl. No. 2 of the table annexed to Rule 57Q with effect from 1.3.97. For the period prior to 1.3.97, Ld. SDR submits that, by virtue of the exclusion contained in Clause (aa) of Explanation (1) to Rule 57Q (as the rule stood at the material time), the computer hardware, as goods falling under the above Chapter Headings, were not eligible capital goods credit. For these reasons, Ld. SDR urges that the decision of the Commissioner (Appeals) on the modvatability of computer hardware should be upheld. On the modvatability of lubricants, Ld. SDR fairly concedes that such goods have been held to be eligible inputs by a Larger Bench of the Tribunal, for periods prior to 1.3.97. He has cited the Larger Bench decision as Commissioner Vs. Modi Rubber Ltd. [2000 (38) RLT 718]. He has further conceded that lubricants are eligible capital goods for modvat credit with effect from 1.3.97 as per Sl. No. 12 of the table annexed to Rule 57Q.
5. I have carefully examined the records and considered the submissions of Ld. SDR as well as the grounds of the appeal. I find that, tin the show-cause notice, the department had raised a specific allegation that computer hardware falling under Chapter Headings 84.71 and 84.73 were not eligible capital goods as they did not find place in the table annexed to Rule 57Q at the material time. I find that this allegation was left unanswered by the party in their reply to the notice. The appellants also have not raised any valid ground against denial of modvat credit on computer hardware, in the memorandum of appeal. For the periods both prior to and after 1.3.97, goods falling under Chapter Headings 84.71 and 84.73 have stood excluded from the category of modvatable capital goods. The findings of the lower authorities in this behalf cannot be faulted. I, therefore, uphold the said findings. As regards the issue whether lubricants were modvatable goods during the relevant time, I note that the goods have been held to be eligible inputs, for periods prior to 1.3.97, by the Larger Bench in the aforecited case of Modi Rubber Ltd. and that, form 1.3.97, lubricants and greases are eligible capital goods by virtue of the entry at Sl. No. 12 of the table annexed to Rule 57Q. Therefore, modvat credit on lubricating oils as inputs or capital goods is available to the appellants for the period prior to 1.3.97 or the period from 1.3.97, as the case may be. The decision of the lower authorities on the point is erroneous and will stand set aside. The jurisdictional Assistant Commissioner shall work out the credit on lubricants available to the appellants for the relevant period in terms of this order and extend the benefit to them.
6. The appeal stands allowed in part as above.