Customs, Excise and Gold Tribunal - Mumbai
Grindwell Norton Ltd. vs Commissioner Of Central Excise on 1 September, 2003
Equivalent citations: 2003ECR682(TRI.-MUMBAI), 2004(178)ELT409(TRI-MUMBAI)
ORDER
S.S. Sekhon, Member (Technical)
1. Appellants after filing declarations as required, under erstwhile rules, availed credit under Rule 57Q on:
i) Hardened & Tempered Steel Strips;
ii) Aluminium Ingots.
The strips was used as Die liners in the Mould Dies required for Grinding Wheels, while the ingots and were got converted into Aluminium Castings on job work and thereafter used in the appellants factory to hold the Grinding Wheels in the trolleys, during the baking process in the ovens, an essential step in the manufacturing of the find product i.e. Grinding Wheels.
2. Credit was denied on the Hardened & Tempered Steel Strips and Aluminium Ingots by the Commissioner (Appeals) on the grounds:
It will be seen that only goods described in column No. 2 of the table and no other goods can be considered 'capital goods' for the purpose of this Rule, Prior to 16.3.
"RULE 57Q. Applicability. - (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the "final products") described in column (3) of the Table given below and to the goods (hereinafter, in this section, referred to as "capital goods, described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacture of final products"..1995, the definition contained a clause that specified items must be used for producing or processing of any goods or for bringing about any change in any substance for manufacture of final product. This was later deleted. As such under the Rule as it existed during the material time, the only available criterion for deciding whether any particular item was capital goods or not, was, whether the same was listed in Column No. 2 of the table appended to the Rule. If it was listed there, it was capital goods for the purpose of Section AAAA of Central Excise Rules 1944. Otherwise it was not. There was no discretion vested on any officer to decide it on the basis of 'use for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. Going by the said criterion, neither the 'Hardened and Tempered Steel Strips' falling under Chapter 72.11 of Central Excise Tariff nor Aluminium Ingots falling under C.H.76.01 of Central Excise Tariff could be considered capital goods within the meaning of Rule 57Q of Central Excise Rules, 1944 as it existed during the material time. Therefore, the finding of the lower authorities that the same were not capital goods and were not eligible for credit under Rule 57Q cannot be faulted with.
Coming to other arguments that even if these products were not considered capital goods, the credit was nevertheless allowable under Rule 57A by treating them as inputs, I find that the appellants have argued at length in the appeal that 'Hardened and Tempered Steel Strips' were capital goods within the meaning of Rule 57Q. In respect of Aluminium Ingots, it is admitted that the same were not capital goods and it has been argued that credit was allowable under Rule 57J of Central Excise Rules. Substantial benefits conferred by law should not be denied for curable procedural lapses. But on lapses being pointed out, the appellants ought to have filed revised declarations to enable the authorities to examine their eligibility to credit under Rule 57A. It is claimed that the 'Hardened and Tempered Steel Strips' are being used for manufacturing of 'Die liners', which are claimed to be used as accessories of moulds and dies. If the appellants had filed revised declarations showing 'Hardened and Tempered Steel Strips' as 'inputs' and 'Die liners' as final products, the authorities below could have verified their eligibility and recorded a finding on the same. Similarly, the credit under Rule 57J was admissible only if the intermediate products were manufactured on job-work basis under Notification 214/86. The said notification stipulates filing of a declaration with the Assistant Commissioner having jurisdiction over the factory of job-workers and following the procedure prescribed under the said notification. If the appellants had filed revised declarations and lodged a proper claim before the lower authorities, they could have examined the eligibility of appellants and or recorded a finding. If such finding(s) were not proper and legal, the same could have been set right in the appeal. The appellants by their failure to do so have made it impossible to examine their claim at this stage".
Hence this appeal.
3. On hearing both sides and with waiver of pre-deposit, the appeals are taken for disposal by this order. After considering the submission made it is found:-
a) On a careful examination of the table to Rule 57Q it is clear that all goods falling under Chapter 84 are covered by S. No. 2 of the table. Moulds fall under 84.80 and would be covered by S. No. 2 Components, spares and accessories of S. No. 2, are covered by S. No. 5. While Moulds and Dies are again specified and covered under S. No. 6. Therefore accessories/components of Moulds are eligible Capital goods. Since S. No. 5 covers components, accessories of the goods at S. No. 1 to 4 irrespective of classification in the Tariff, the findings of the Commission that Steel Strips and Aluminium Ingots are not specified Tariff, cannot be upheld.
b) On examining the use, the entities are put to it is found - Hardened and Tempered Steel Strips are used as Die Liners after cutting to size and Aluminium Ingots have been used as capital good components/accessories after converting to casts and used in relation the manufacture of Grinding Wheel in the factory of the appellants. Rule 57D(2) of the Modvat Rules at the relevant time permits the eligibility as capital goods, when such capital goods were got manufactured into parts/components or complete machines etc for eventual use in the premises as in this case. Provisions of this Rule 57D(2) has completely been overlooked by the learned Commissioner. Credit if eligible cannot be denied merely because of filing of declaration under Rule 57T instead of 57G or vice versa. This has been well settled by the larger Bench decision of this Tribunal in the case of Modi Rubber Ltd (2000 (119) ELT 197 (T-LB). The denial of the credits by the lower authority therefore cannot be upheld.
c) Once eligibility to credit is upheld, submission on limitation, then orders, on penalty, as arrived can not be sustained.
4. In view of the findings, the appeals are allowed after setting aside the order. Stay application also stands disposed.