Customs, Excise and Gold Tribunal - Tamil Nadu
Motor Industries Co. Ltd. vs Commissioner Of Central Excise on 27 January, 1998
Equivalent citations: 1998(60)ECC101
ORDER
T.P. Nambiar, Member
1. The present appeal is filed against the order passed by the Commissioner (Appeals), Bangalore.
2. The issue involved in this case is with respect to the eligibility or otherwise of the MODVAT credit of Fork Lift Trucks in terms of Rule 57Q of the Central Excise Rules. The Fork Lift Truck is used for handling equipments used for the manufacture of the materials.
3. The learned Advocate. Shri Raghavan, pointed out that this issue is squarely covered by the decision of the Tribunal in the case of CCE v. M.M. Forgings Ltd. reported in 1996 (15) RLT 374, wherein, the Tribunal at para 4, held as follows:
4. We have considered the pleas made by both the sides. We observe that on reading of the definition of capital goods as set out under Rule 57Q, we ourselves had entertained a doubt pruna-facie that the equipment like Fork Lifts may not be covered by this definition. A plain reading of the definition would appear to indicate that the activities in which the capital goods are to be used have to be such that these are for either producing or processing of the inputs or for bringing about any change in the materials used for the manufacture of the finished products. However we observe that the scope of MODVAT Scheme was enlarged to cover the capital goods with a view to give relief to the industry from cascading effect of duty. The term capital goods therefore has to be read in the context of the use of the equipments in the asessee's factory. What has to be seen is whether the equipment used is a part of the manufacturing stream in the assessee's factory and whether the use is for production or processing or for bringing about any change in the materials used in the manufacture of the final product. The Hon'ble Supreme Court in the case of Collector of Central Excise v. Rajasthan State Chemical Works, had occasion to consider the scope of the term processing in the assessee's factory in that case and which equipment was only doing the function of lifting of brine solution. In that case the Supreme Court has clearly held that handling would also be a process in the context of notified finished products in case it could be. shown that without the function of handling the final product could not be manufactured. What is therefore to be seen is whether the equipment which is brought in as such that without the use of which for handling purpose the final product cannot be manufactured in the appellants' factory. In that event the benefit of MODVAT Credit in respect of that equipment has to be allowed. In the present case the goods involved are Fork Lifts which are used for lifting. The respondents it has been pleaded are manufacturing iron forgings of various sizes weighing as much as one tonne or so and unless these are lifted and the materials out of which the same has been manufactured are transported, the manufacturing process is not possible. We observe that the respondents' case in the light of the plea made will have to be considered in the light of the judgment of the Hon'ble Supreme Court referred to supra. The plea of the Revenue is that the definition of capital goods as set out under Rule 57Q should not be read with the wordings of Rule 57S. We observe that the MODVAT Scheme is an integrated scheme and there are various provisions under different rules from which the scope of the scheme can be read. Under Rule 57S it is clearly stated that the MODVAT Credit in respect of capital goods can be utilised so long as the same were used in or in relation to the manufacture of the final product. This clear provision about the use as above cannot be ignored and the use of the capital goods therefore for Modvat purpose will have to be considered in or in relation to the manufacture of the notified products. We therefore find no force in the plea of the Revenue and we hold that the appellants would be entitled to the benefit of MODVAT Credit in case they are able to show that the use of Fork Lifts is essential in the respondents' factory and without the use of the same the Respondents would not be able to manufacture the final product. In this view of the matter we remand the matter to the learned lower authority for this limited purpose. We dismiss the appeal subject to the above observations.
5. Heard the learned SDR.
6. Following the above said decision, I allow this appeal by way of remand with a direction to the original authority to examine the issues in the light of the above said decision, and if the appellants are able to show that the use of the Fork Lift Truck is essential in their factory for manufacture of the goods in question, they are entitled for the MODVAT credit.
7. The appeal is allowed by remand in the above terms.
Pronounced and Dictated in the Open Court