Customs, Excise and Gold Tribunal - Delhi
Nahar Spinning Mills Ltd. vs Commr. Of Central Excise on 1 August, 1997
Equivalent citations: 1998(97)ELT127(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original dated 14-11-1996, passed by the Commissioner (Appeals), Indore, who has modified the Order-in-Original. By this order, he has held that an amount of Rs. 1,44,948/- out of the demand of Rs. 13,49,004/- raised in the show cause notice Being the inadmissible credit availed by themselves, and which has been disallowed and confirmed for recovery under Rule 57U of Central Excise Rules, 1944, read with Section 11A of Central Excises and Salt Act, 1944. He has held that the remaining portion of demand is dropped being not sustainable. A penalty of Rs. 35,000/- has been confirmed.
2. The case rests on three issues, one pertaining to non-production of duplicate copy of invoice involving credit of Rs. 839/-.
3. On this point the Learned Chartered Accountant submits that they had produced a carbon copy of the invoice along with original. It is his contention that only the words marked to the transporter had not been stamped on the invoice i.e. "duplicate for transporter" had not been marked. This is only a technical violation for which, the Modvat credit cannot be denied. He points out that the Learned Commissioner has incorrectly submitted that they had not produced the duplicate copy. It is contended that if the matter is remanded, they will be in a position to satisfy them.
4. I have heard the Learned DR on this point. I have seen all the invoices produced and I agree with the Learned Chartered Accountant that this matter is required to be remanded for de novo consideration. The lower authorities shall examined the plea raised by them and re-consider the same.
5. As regards the denial of Rs. 1141/- in respect of invoice No. 07747/94, dated 12-12-1994, No. 07921/94, dated 17-12-1994 and No. 07201/94, dated 26-11-1994, the Learned Commissioner has held that the product description and specification of the goods, number and description of packages, quantity, order number as per godown order cum challan enclosed was not presented to the jurisdictional officer. He has also observed that in the absence of description of goods, it is not possible to ascertained as to which goods were received by them and hence Modvat credit is rightly denied.
6. On this point also the Learned Chartered Accountant exhibits the invoice on which all the details have been written. He points out that the description of goods 'Doffer Wire' has been written in hand by the manufacturer itself and the Tariff Heading 8448.00 refers only to 'Doffer Wire', which is in type writing. He also points out that they had filed a declaration on 21-4-1994 in which they had declared that they would be taking Modvat credit in respect of 'textile machinery and parts'. The items being a spare of textile machinery, it was entitled for the benefit of Modvat credit. He points out that the Learned Commissioner has recorded that they did not produce the challan which is not correct. They had produced the invoices and challans, which have not been examined. He submits that he will be in a position to satisfy on this point also.
7. I have heard the Learned DR.
8. On a careful consideration, and on perusal of these invoices, I notice that the description of the goods 'Doffer Wire', has been written in hand and so also the vehicle number and serial number. Merely because these details have been written in hand, that itself is not a ground for rejecting so long as it satisfies all other aspects of the matter and that there is no mala fides involved. Therefore, I remand this matter to the original authority for de novo consideration to grant the Modvat credit.
9. As regards the claim for benefit of Modvat credit in respect of 'Capital goods' pertaining to 'personal computer' installed in the quality Control Room and 'Vaccum Cleaner' said to have been fixed on the machine itself, the Learned Chartered Accountant relies on series of judgments, wherein such relief has been given for such products as in the case of Geep Industrial Syndicate Ltd. v. Commissioner of Central Excise, as reported in 1996 (88) E.L.T. 753, wherein electrically heated muffle furnace used for testing quality of raw material have been granted the benefit of Modvat credit. In the case of AVI Photochem Ltd. v. Commissioner of Central Excise as reported in 1997 (93) E.L.T. 439, it has been held that 'densitometer' used as the means of ensuring that the chemicals manufactured by it are of the required strength and position and being essential requisite for manufacture of finished goods, the Tribunal has held that the benefit is required to be extended. The Learned Chartered Accountant submits that the computer is installed in the Quality Control Room. It is stated that the data pertaining to the quality of the product is fed in the machine and the machine analysis the data and gives the result on the basis of which it is determined as to whether the goods are manufactured as per the requirement or not. He submits that without this computer, the final product cannot be manufactured as per the requirement. Therefore, he contends that this 'personal computer' is required to be considered as a capital goods to be used in or in relation to the manufacture of the final product.
10. As regards the 'Vaccum Cleaner', he submits that it is installed on the machine itself which works along with the machine and it cannot be separated. He submits that it is not a Humidification plant, which is installed separately and only the Tribunal had denied the benefit in the case of Collector of Central Excise v. Shanmugaraja Spinning Mills Pvt. Ltd. as reported in 1997 (89) E.L.T. 84. This citation was referred to by the Learned DR in the course of his arguments. The Learned Chartered Accountant submits that this case is distinguishable. He also relies on the judgment rendered in the case of Commissioner of Central Excise v. Modi Xerox Ltd. as reported in 1996 (88) E.L.T. 530, wherein it has been held that chilled water coil used for air handling unit meant for bringing down temperature in the coating room is considered as capital goods covered under Rule 57Q of the Central Excise Rules, 1944, so also 'weighing machine' have also been considered as capital goods. Therefore he submits that the benefit is required to be granted in respect of these two items.
11. Countering the arguments, the Learned DR submits that both these items have been rightly denied the benefit. Both these items cannot be considered as capital goods, as they do not directly participated in the manufacture of final goods. In this regard he relies on the judgment rendered in the case of Commissioner of Central Excise v. Fourts (India) Laboratories Pvt. Ltd. as reported in 1997 (20) RLT 573.
12. The Learned Chartered Accountant also submits that the benefit has also denied on Electric Transformer, which is not justified. On transformers, he relies on the judgment rendered in the case of Marvel Vinyls Ltd.-v. Collector of Central Excise, as reported in 1997 (90) E.L.T. 361 and that of Valley Abrasives Ltd. v. Collector of Central Excise as reported in 1997 (91) E.L.T. 700. He submits that as regards the transformers are concerned, the benefit cannot be denied, as the matter has been settled.
13. The Learned DR submits that the judgment of the Tribunal as regards the Transformers are against the provision of Rule 57Q(2), as there cannot be estoppel against law; the matter is required to be referred to be Larger Bench as far as transformers are concerned. The Learned DR submits that the transformers have been installed before 16-3-1995 and the amendment to the Rule 57Q incorporating transformers are eligible capital goods was made by Notification No. 11/95-C.E., dated 16-3-1995.
14. Countering the argument, the Learned Chartered Accountant relies on another judgment rendered in the .case of Collecior-of Central Excise v. Not? Bharat Paper Mills as reported in 1996 (86) E.L.T. 501. He submits that this point raised by the Learned DR has been dealt with in the case of Valley Abrasives Ltd., wherein it has been held that the Notification is clarificatory in nature. It has been held that there is not specific reason to restrict the meaning of the word 'plant' in the context of the beneficial provision that Rule 57Q is keeping in view the general meaning of the word 'plant', Clauses (a) and (b) on their plain reading would also include the transformer and, therefore, the benefit of Mod-vat credit to the transformers under Rule 57Q as it exist before 16-3-1995 should be allowed. It has also been held that the goods are covered by. the general definition of Clauses (a), (b) and (c) and it is only by way of abundant caution that Clause (d) has been introduced to set at rest any controversies and doubts. It has also been held that Clause (d) is only of a clarificatory nature and it should be given a retrospective effect.
15. I have carefully considered the submissions made by both the sides. I notice that the issue of grant of Modvat credit in respect of transformer has been clearly spelt out and dealt with the Tribunal in three of the judgments referred to. I have perused the judgments and I have been in respectfully in agreement with the same. I am not in a position to take a different view as pleaded by the Learned DR, as I find that the Tribunal has clarified all the points raised by him in the case of Valley Abrasives Ltd. At this stage, the Learned DR forcibly argued that in the case of Shanmugaraja Spinning Mills Pvt. Ltd. (supra), the Tribunal has observed that there has to be a nexus between the goods and the plant and in case of transformers, it does not have direct nexus and participation in the manufacturing process. I am not in a position to appreciate his argument, as I notice that this point has been dealt with in all the judgments referred to and there is no ground made out for reference to Larger Bench. Therefore, I hold that the appellants are entitled to benefit of Modvat credit in respect of transformer.
16. As regards the claim for Modvat credit for personal computer installed in Quality Control Room and that of Vaccum Cleaner, the appellants have not produced any evidence to support their plea. However, I notice that the Tribunal has taken a view in one way or the other in respect of said items. Therefore, it is but proper that the matter is remanded for de novo consideration in respect of these two items. The lower authorities shall take into consideration the judgments cited above and re-determine the issue. The appellants shall be granted an opportunity of hearing and also an opportunity to establish that both the items are participated in the manufacture of final goods, as a capital goods. In that view of the matter, the appeal is allowed in the above terms.