Customs, Excise and Gold Tribunal - Mumbai
Finolex Cables Limited vs Commissioner Of Customs And Central ... on 5 September, 2003
ORDER Jyoti Balasundaram, Member (J)
1. This is an appeal against the order of the Commissioner of Central Excise (Appeals) disallowing total modvat credit Rs. Rs. 93,544/- on the following items:
(1) High Speed precision production lathe, (2) Electrostatic Water Treatment Unit; and (3) Milling Machine
2. The ground for denial of credit on the high speed precision production lathe and milling machines is that they were used in the workshop for repair and maintenance of machinery and hence not eligible to capital goods credit. The ground on which credit has been disallowed on electrostatic water treatment unit is the reliance on the Tribunals' decision in Shanmugaraja Spinning Mills Ltd. v. CCE 1998 (98) ELT 702
3. I have heard both sides.
4. The Tribunal has held in a series of decisions that items used for maintenance and repair in a factory are not eligible to capital goods credit. Following the ratio of these decisions I hold that credit on these two items i.e., high speed precision production lathe and milling machine, is not admissible to the appellants.
5. Regarding electrostatic water treatment unit I extend capital goods credit as subsequent decision of the Tribunal have held that the ratio of the order in the case of Shanmugaraja Spinning Mills Ltd. v. CCE is not correct and credit has been extended on similar items.
6. Penalty of Rs. 9,000/-imposed upon the appellants is set aside in the light of the larger bench decision in the case of J.P. Rewa Cements 2003 (57) RLT 739 wherein although credit was wrongly taken on welding electrodes and gases used for repair and maintenance of the plant and machinery penalty had been set aside. In the result I hold that the appellants are entitled to credit of Rs. 4,174/- availed on electrostatic water treatment unit and not entitled to the balance credit on the other two items and I also set aside the penalty.
7. The appeal is thus partly allowed.