Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Modi Xerox Ltd. on 24 April, 1998
Equivalent citations: 1998(103)ELT683(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this appeal filed by the Department the issue involved is whether dryer with prefilter and postfilter erected in photoreceptor room is capital goods or not under Rule 57Q of the Central Excise Rules.
2. Arguing on behalf of the Revenue the ld. DR refers to the decision in the case of CCE, Coitnbatore v. Shanmuga Raja Spinning & Weaving Mills Ltd. reported in 1997 (89) E.L.T. 848 and submits that the issue regarding restricted nature of definition of the capital goods and retrospective effect of amendments made in Rule 57Q have been referred to the Larger Bench. He, therefore, submits that present appeal may be kept in abeyance till the decision of the Larger Bench. While the ld. Representative of the Respondents submits that the issue involved has been settled by the Tribunal in their own case as per Final Order No. A/410-411/97-NB in Appeal No. E/1577 & 1594/95-NB. He also mentioned that one of the items involved in this order was Thermohygrograph which is part of the plant and is used for maintaining uniform temperature and humidity of the cooling room of the photoreceptor drums. Tribunal distinguished the decision in the case of Shanmuga Raja Spinning Mills (supra) as follows :-
"The judgment relied upon by the learned JDR in the case of Shanmuga Raja Spinning Mills Pvt. Ltd. referred (supra) holding humidification plant as not covered by the definition of capital goods is in the facts and circumstances of that case as it was found in that case that the creation of atmosphere by the humidification plant was not having any nexus for bringing about any change in the substance of the goods. However, in the instant case, I have seen that without the use of thermohygrograph it is not practicable for the manufacture to complete the process of coating of the photoreceptor drums. Accordingly, following the earlier judgments of the Tribunal in respect of chilled water coils and also taking into consideration the observations made by the Honourable High Court of Ahmedabad, I hold that the thermohygrograph used for maintaining certain temperature and humidity in the coating room for the purpose of complete process of coating which is an integral process of manufacture of final product is covered by the definition of capital goods as given in Explanation of Rule 57Q and is entitled to Modvat credit. Accordingly the appeal filed by the Department is rejected."
3. He submits that the dryer with prefilter is also part of the Air handling units and as such it is eligible for the capital goods credit. He also mentioned that this decision has been followed by the Tribunal in the case of Birla VXL Ltd. v. CCE, Chandigarh reported in 1998 (99) E.L.T. 452 and he relied upon another decision in their own case as per Order No. A/230/98-NB [1998 (102) E.L.T. 566 (Tribunal) in which the capital goods credit was allowed in respect of fan coils. In reply the ld. DR vehemently submits that the matter has been referred to the Larger Bench and these issues are to be decided there. He also mentioned that the capital goods credit has also been denied in respect of Air Conditioners reported in 1997 (92) E.L.T. 231.
4. I have considered the submissions made by both sides. The Respondents have brought on record the decisions in their favour in which Capital Goods credit has been allowed in respect of distribution panel/control panel and Thermohygrograph (Temperature and Humidity Recorder) and in respect of fan coils. The Tribunal while holding the Thermohygrograph as capital goods observed that Thermohygrograph is used for maintaining a uniform temperature and humidity for the purpose of completing the process of coating which is integral process of manufacture of final product and as such is covered by the definition of the capital goods. The Respondent has explained that unless the Air in the Thermohygrograph room is clarified and clean, the process of coating which is magnetic in nature cannot be completed and as such the air handling units dryer with filter, which is essential for bringing the change in the air for the purpose of further processing is used in bringing about a change in a substance. Following the ratio of the decisions in the Respondents' own case, I do not find any reason to interfere with the orders passed by the Commissioner (Appeals). Accordingly, the departments' appeal is dismissed.