Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Titan Industries Limited on 3 March, 2000
Equivalent citations: 2000(69)ECC428, 2001(135)ELT515(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The respondents are manufacturers of watch and watch components falling under Chapter 91 of the Schedule to the Central Excise Tariff Act and are also availing the facility of Modvat Credit on capital goods.
2. They took Modvat credit of duty amounting to Rs. 58,752 and Rs. 28,400 on control panel and Evaporation unit respectively in their RG 23 C Part II on 13.4.95 and 13.6.95 respectively. Both the said goods were parts of their air-conditioning plant used as indispensable aid for the process of manufacture. It was only in Air-conditioned atmosphere that the watches and watch components etc. could be manufactured by the Respondents. The credit so taken by the party was disallowed by the Jurisdiction Assistant Commissioner, who also imposed penalty on them for the alleged contravention of Modvat rules. The Assistant Commissioner's order disallowing the Modvat credit was on the ground that the goods in question did not qualify as capital goods for availment of credit under Rule 57Q of the Rules. The aggrieved party preferred an appeal to the Commissioner (Appeals) against the order of adjudication of the Assistant Commissioner. The Commissioner (Appeals) allowed the appeal of the party as per order dated 26.11.97 holding inter alia, that both the aforesaid goods were eligible as capital goods for the Modvat credit under Rule 57Q and that penalty was not imposable inasmuch as Modvat claim involved only interpretation of Modvat rules. The present appeal filed by the Revenue is against the order of the Commissioner (Appeals).
2. I have carefully examined the impugned order and connected records of the case. The department, in their grounds of appeal, have contended that Control Panel and Evaporation unit used by the Respondents in their air-conditioning plant cannot be termed as capital goods because, according to them, the said goods did not have any direct participation in the process of manufacture of watch and watch components. I have heard the Ld. DR for the Appellant-Revenue and Shri Sreenivasaraghavan, Ld. Counsel for the Respondents.
3. The Ld. DR has reiterated the grounds of the Appeal and has prayed for setting aside the order of the Commissioner (Appeals).
4. Ld. Counsel has opposed the submissions of the Ld. DR and has justified the order of the lower appellate authority. In support of his contention, he has cited the Tribunal's Larger Bench decision in the case of Jawahar Mills Ltd. v. CCE Coimbatore . He has prayed for rejection of the appeal.
5. I have considered the rival submissions. I note that there is no dispute of the fact that the goods in question are parts of the air-conditioning plant of the Respondent and that the Respondents carry out their manufacturing process in air-conditioned atmosphere created by making use of the air-conditioning plant, of which the goods in question form a part. The only question surviving for consideration is whether parts of air-conditioning plant of watch manufacturers are eligible for Modvat credit under Rule 57Q of the Central Excise Rules. In the case of Jawahar Mills Ltd. (supra) relied upon by the Ld. Counsel, the Larger Bench of the Tribunal considered the scope and ambit of the explanation of Rule 57Q(1) of the Central Excise Rules. The ratio of the said decision is aptly applicable to the issue at hand. The goods in question in the present case are admittedly parts of the plant and the plant is eligible for Modvat credit under the explanation to Rule 57Q(1) vide Clause (a) of the explanation. "Parts, accessories etc. of plant are also eligible for Modvat credit under the said explanation vide Clause (b). In this view of the matter, the goods in question are eligible for Modvat credit as per Clause (b) of the Explanation to Rule 57Q(1). Even apart from this, watches and watch components are manufactured in Air-conditioned atmosphere, which is a fact of common knowledge, not disputed before me. I, therefore, hold that the goods in question will be covered by the expression "used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of the final product" under the explanation to Rule 57Q(1) ibid. Therefore, the goods in question are certainly eligible as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules as rightly held by the lower appellate authority. I therefore do not find any merit in the department's appeal and the same is rejected.