Customs, Excise and Gold Tribunal - Delhi
C.C.E., Jaipur vs M/S. Udaipur Petro Synthetics Ltd. on 9 May, 2001
ORDER S.S. Kand, J.
1. When the case was called, none appeared on behalf of the respondents.
The revenue filed this appeal against the order-in-appeal passed by the Commissioner (Appeals) whereby the benefit of MODVAT Credit on capital goods was allowed. The Commissioner, in the impugned order, held as under:
" I have gone through the case record. I find, vide the impugned order, modvat credit has been denied on 2 items, namely, (a) Motor Controls Centre Type Process and (b) Motor Control Central Type T.F.O. under Rule 57Q of the Central Excise Rules, 1944 on the grounds that these electrical goods do not produce electricity but control and facilitate power supply. There is a plethora of decisions allowing modvat credit on such electrical items. In view of the same, the impugned order is set aside."
2. Heard ld. D.R. and perused the appeal papers.
3. The contention of the revenue is that the Commissioner (Appeals), while allowing the benefit of credit as capital goods, has not given any finding in respect of the eligibility of the goods in dispute as capital goods. The revenue is relying upon the Larger Bench decision of the Tribunal in the case of M/s. Surya Roshni Ltd. vs C.C.E. (Misc. Order No. M/15/2001-MB(S) dated 30.1.2001). In this case the Tribunal as under:
4. Rule 57Q was introduced by Notification No.4/94-CE dated 1-3-1994. This provision enabled manufacturers to claim Modvat credit of duty paid on capital goods used in their factory. Capital goods, which were eligible for Modvat credit, were enumerated by way of Explanation. For a proper understanding of the capital goods, which were covered by the said Rule. We read the Explanation (1), which gave definition of "capital goods."
"(1) 'Capital goods' means-
(a) Machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products:
(b) Components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tool or appliances used for aforesaid purposes: and
(c) Moulds and dies, generating sets and weigh bridges used in the factory of the manufacturer."
From the above definition, "capital goods" can be machines, machinery, plant equipment apparatus, tools or appliances. Whatever be the category to which the goods belong, (1) they must be used for producing the final product; (2) must be used for processing of any goods for the manufacture of final product or(3) used for bringing about my change in any substance for the manufacture of final product. Thus, it is clear that any machine, machinery, plant, equipment, apparatus, tools or appliances if satisfy any one or more of the three conditions mentioned therein. such "capital goods will be entitled to Modvat credit" only the complete machines, machinery, plant, equipment, apparatus, tools or appliances falling under clause (a), their components, spare parts and accessories are also to be treated as capital goods entitled to Modvat credit. The only condition that is to be satisfied for clause (b) to come into play is that components, spare parts and accessories must be of machines machinery, plant, equipment, apparatus, tools or appliances used in one of the functions mentioned in clause (a). Over and above mentioned two categories falling under clause (a) and (b), moulds and dies, generating sets and weigh bridges used in the factory of the manufacture will also be entitled to Modvat credit as "capital goods." Those capital goods mentioned in clause (c) need not be used for producing the final products or used in the process of any goods for the manufacture of final product or used for bringing about any change in any substance for the manufacture of final products.
5. If any particular goods satisfy the requirements detailed in the preceding paragraph, then duty paid on such capital goods can be claimed by way of Modvat credit by the manufacturer.
In the impugned order, the Commissioner (Appeals) has not given any finding in respect of eligibility of the goods as capital goods. Therefore, the matter is remanded to the Commissioner (appeals) for deciding afresh in view of the decision of the Larger Bench of the Tribunal (supra). The appeal is disposed of by way of remand. (Dictated in Court).