Customs, Excise and Gold Tribunal - Tamil Nadu
Siv Industries Ltd. vs Commissioner Of Central Excise, ... on 11 October, 2001
JUDGMENT Jeet Ram Kait, Member (T)
1. As the issue lies in a short compass, we take up the stay application and the appeal together for final disposal.
2. The appellants have failed this appeal against the order in appeal No. 100/2001 (GVN) dt. 23.5.2001 passed by the Commissioner of Central Excise (Appeals), Tiruchy. The Commissioner (Appeals) has denied the Modvat credit under Rule 57 Q of Central Excise Rules, 1944 for spares used in capital goods for generation of electricity. The spares were purchased under Modvat scheme are used by them for generation of electricity. They are using two boilers in their plant to generate steam at 42 kgs. Pressure per cubic meter and 410 degree centigrade temperature and is fed into the turbine of the generator. The electricity generated from the turbine is used for manufacturing activity in the manufacture of their final product Viscos stable fibre and yarn which are both cleared on payment of duty from their factory as their final product. He therefore submits since the spares for Turbine are used for generation of electricity and that electricity being an intermediate product is used for their final product viscos stable fibre and yarn Modvat credit cannot be denied to them under Rule 57Q for spares used in the turbine of the generator.
3. The Ld. Counsel for the appellants, while arguing, submits that in the appeal and the stay application they had submitted that the issue is no longer res integra as the issue has already been decided in favour of the assessee in the decision rendered in the case of CCE, Meerut v. Gangeshwar Ltd. Reported 2000 (36) RLT 189 (CEGAT). Since it has been held that Modvat credit on the capital goods is available under Rule 57Q of the Central Excise Rules 1944 on turbine used for generation of electricity which is used for running the plant and machinery for manufacture of sugar. He invited out attention to para 5 of the above judgment rendered by the CEGAT which is extracted herein below.
"5. On a careful consideration of the submissions made by both sides, we find that insofar as boiler material is concerned, the same is covered by the decision of this Tribunal cited above. Following the ratio of that decision under Rule 57 D(2), we hold that Modvat credit will be admissible on boiler material.
Insofar as pipe fittings and pipes are concerned, we find that there are number of Tribunal's decisions in which it has been held that the pipes are used for conveying the materials which is used in the process of manufacture then they are capital goods. In the instant case pipes and pipe fittings are used for conveying the steam which is in turn used for moving the turbine for generation of electricity and therefore, pipes and pipe fitting will be entitled to Modvat credit.
On turbines we note that turbines are used for generation of electricity and since electricity is used for running the plant and machinery for manufacture of VP Sugar, therefore, turbine is a machine and will be eligible for Modvat credit inasmuch as it is used for production of the final product.
In sofaras cables are concerned, we follow the ruling of the Larger Bench of this Tribunal and hold that Modvat credit will be admissible on cables as capital goods under Rule 57Q of the Central Excise Rules."
The Ld. Counsel also drew our attention to another decision rendered by the Larger Bench in the case of Ballarpur Industries Ltd. v. CCE reported in 2000 (116) 312(T) wherein it has been held by majority decision that inputs used for generation of electricity which in turn is used in the manufacture of their final product they are entitled to Modvat credit.
4. Heard Shri Sree Kumar Menon, Ld. SDR. He drew our attention to para 3 of the impugned order passed by the Commissioner (Appeals) in which he has held that since the electricity cannot be considered as final product or intermediate product under rule 57Q of Central Excise Rules the contention of the appellants that they are eligible for Modvat Credit on electricity and the same is used indirectly for the manufacture of Viscos stable fibre and yarn which are liable to central excise duty cannot be accepted. The Commissioner (Appeals) further held that the final product are only those products which are finished goods having marketability, saleability/usage etc. and which are also excisable goods. The Ld. SDR further submits that since the electricity cannot be considered as final product as the same is not falling under CETA 1985, so the question of applicability of Rule 57Q for spares used in capital goods for generating electricity does not arise.
5. We have considered the submissions made by both sides and we are of the considered opinion that Modvat credit is available and the spares used in the turbine of the generator used for generation of electricity, are used in or in relation to the manufacture of final product namely Viscos Stable fibre and yarn which are cleared on payment of duty. The issue is no longer res integra and has been finally decided by the Tribunal in the case of CCE., Meerut v. Gangeshwar Ltd. Reported in 2000 (36) RLT 189 (CEGAT) and in the case of Ballarpur Industries v. CCE. Reported in 2000 (116) ELT 312 (T). Therefore, we set aside the imdpugned order and allow the appeal. The Stay application is also disposed of accordingly.
(order dictated and pronounced in the open court)