Customs, Excise and Gold Tribunal - Delhi
Devidayal Aluminium Indus. (P) Ltd. vs Commr. Of C. Ex. on 28 July, 2000
Equivalent citations: 2000(121)ELT114(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. Under show cause notice dated 23-12-1997 issued to M/s Devidayal Aluminium Indus. (P) Ltd., it was alleged by the Asstt. Commissioner of Central Excise, Division-II, Ghaziabad, that the noticees had wrongly taken and utilized Modvat credit of Rs. 19,691/- during July, 1997 to November, 1997 in respect of mild steel twisted bars, shapes and sections of iron & steel, and mild steel angles (hereinafter referred to as the 'inputs'), under Rule 57-S of the Central Excise Rules, 1944 (hereinafter referred to as the Rules'). These inputs were used in the fabrication of skid rails, skid tubes and stands. These skid rails, skid tubes and stands were fabricated for holding the material and pushing the same through the furnace, for slab heating and annealing processes etc. during the course of manufacture of brass strips/foils etc. Following the Tribunal's decision in the case of Vivek Alloys Ltd. v. CCE, Coimbatore, 1998 (98) E.L.T. 156 (T), the Commissioner of Central Excise (Appeals), Ghaziabad, held that no credit was available in respect of such inputs.
2. The matter was heard on 20-6-2000, when Shri R.S. Pandey, consultant, submitted that the goods in dispute were used in the manufacture of skid rails, skid tubes and stands which were consumables, and formed an integral part of the furnace. It was the submission of the learned consultant that as the above mentioned inputs were used in the manufacture of capital goods, they were rightly eligible for the Modvat credit. He relied upon the following decisions -
(i) Mahindra & Mahindra Ltd. v. Commissioner of Central Excise, Aurangabad, 1996 (87) E.L.T. 258 (T);
(ii) Star Paper Mills Ltd. v. CCE, Meerut, 1999 (107) E.L.T. 241 (T);
(iii) CCE, Chandigarh v. Steel Strips Ltd., 2000 (116) E.L.T. 49 (T); and
(iv) J.K. Cement Works v. CCE, Jaipur, 2000 (116) E.L.T. 52 (T).
In reply, Shri A.K. Jain, JDR, submitted that the mild steel twisted bars, shapes and sections of iron & steel and the mild steel tubes were not notified items. They were neither part of the furnace nor were they consumables. Thus, the Modvat credit has been rightly denied. He relied upon the Tribunal's decision in the case of Vivek Alloys Ltd. v. CCE, Coimbatore, 1998 (98) E.L.T. 156 (T).
3. I have carefully considered the matter. The appellants had received duty paid mild steel twisted bars (sub-heading no. 7214.90) shapes and sections of iron & steel (sub-heading no. 7216.10), and mild steel angles (subheading no. 7216.10) inputs - and had taken Modvat credit of the duty so paid on these inputs under Rule 57Q of the Rules, credit of the specified duty paid on the capital goods used by the manufacturer in his factory was allowable subject to given conditions and limitations. The above named inputs were not covered within the definition of 'capital goods' as given in the explanation under Rule 57Q. These inputs were used for fabricating skid rails, skid tubes and stands which were also not covered within the definition of capital goods. The skid rails, skid tubes and stands were also not a part of the furnace. These were laid to facilitate holding and movement of the material into the furnace. They could not be considered as parts or components of the furnace.
4. These inputs could not be considered as component parts of the furnace. Furnace is complete without these inputs. They had no role in the construction of the furnace. The skid rails, skid tubes and stands were fabricated to facilitate the movements of the goods. They could not be considered as components, spares or accessories of the capital goods as defined in the explanation under Rule 57Q of the Rules.
5. The fact this these skid rails, skid tubes and stands get worn out over a period of time and needs replacement, could not term the inputs, such as, bars, shapes, sections and angles, as consumable parts.
6. I find that the matter is entirely covered by the Tribunal's decision, in the case of Vivek Alloys Ltd. v. CCE, Coimbatore, supra. It was held by the Tribunal in the said decision that for steel, mild steel rounds and mild steel angles used in the construction of building for housing furnaces in the course of expansion of the factory and not used directly in any machine or machinery or equipment or the like, were not to be regarded as 'plant' and were ineligible for Modvat credit under Rule 57Q of the Rules (Head Note).
7. The case law referred to and relied upon by the learned consultant is not relevant to the facts and circumstances of the case.
In the case of Mahindra & Mahindra Ltd. v. CCE, Aurangabad, (supra) it was observed by the Tribunal that Rule 57Q of the Rules covered not only machinery but also components, spare parts and accessories thereof. Fixtures and baskets formed integral part of the furnace/oven since they were necessary for producing the components.
In the case of Star Paper Mills Ltd. v. CCE, Meerut, supra, it was observed that hot rolled coil in plate form used in the manufacture of storage and processing tanks which in turn are used as capital goods in the manufacture of paper, were eligible to credit as inputs by virtue of sub-para 2 of Rule 57D introduced vide notification no. 17/95-C.E. (N.T.), dated 18-5-1995.
In the case of Commissioner of Central Excise, Chandigarh v. Steel Strips Ltd., supra, the angles and joists/M.S. rounds were used to manufacture conveying system in rolling unit and the Tribunal observed that they were eligible for the benefit of Modvat credit being the part of plant & machinery as falling within the meaning of 'capital goods' in terms of Rule 57Q (1)(b) of the Rules.
In the case of J.K. Cement Works v. CCE, Jaipur, supra, the goods involved were auto mill feed pipes which were an integral part of the raw mix analyser used for analysis of raw mix burnt in the kiln to form clinker during production of cement. The Tribunal observed that they were eligible to Modvat as capital goods under Rule 57Q of the Rules.
In the present case, the inputs were not components, spare parts or accessories of the furnace. They were also not fixtures to the furnace. They were not used in the manufacture of final or intermediate goods for ultimate manufacture of furnace. The inputs in question could not be considered as parts of plant & machinery. Thus, the judgments referred to by the learned consultant are distinguishable and are not applicable to the facts in the present proceedings before me.
8. Taking all the relevant facts and circumstances into account, I agree with the view taken by the learned Commissioner of Central Excise (Appeals). As a result, there is no merit in this appeal and the same is rejected. Ordered accordingly.