Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Cheran Spinners on 26 March, 2004
Equivalent citations: 2004(94)ECC580
ORDER Jeet Ram Kait, Member (T)
1. This appeal is directed against Order-in-Appeal No. 228/2002 (ADK) (CBE) dated 13.11.2002 by which the ld. Commissioner (Appeals) has set aside the order passed by the lower adjudicating authority by allowing the appeal filed by the respondent-assessee before him. while setting aside the order of the lower adjudicating authority and allowing the appeal filed by the respondent-assessee the Commissioner (Appeals) in his findings held that the material handling equipments have been held in the earlier decisions of the Tribunal need not to be used for producing or processing of goods but used in this factory and hence eligible for credit. In this connection ld. Commissioner (Appeals) has relied on the judgment rendered by the Apex Court in the case of CCE Vs. Jawahar Mills Ltd. - 2001 (132) ELT 3 (SC) wherein it has been held that the goods specified in explanation 1 (c) for availing modvat credit on capital goods need not be used in the manufacture of final product and the only requirement is that they should be used in the factory of production. He also relied on the Tribunal's decision in the case of Parle Beverages Ltd. Vs. CCE - 2000 (124) ELT 803 (T) wherein the Tribunal has held that the plastic crates used for transporting the bottles of aerated waters are eligible for modvat credit.
2. Aggrieved by this order the revenue has come in appeal on the ground that during the relevant period only the following goods have been listed as capital goods in respect of which credit can be availed in terms of rule 57Q of the Central Excise Rules, 1944:
(i) All goods of heading non. 82.02. to 82.11
(ii) All goods falling under chapter 84 except 84.07, 84.08, 84.15, 84.18, 8422.10, etc.
(iii) All goods falling under Chapter 85 except a few heading
(iv) All goods falling under heading 90.11 to 90.13, 90.16, etc.
(v) Components, spares and accessories of the goods specified against Sl. No. 1 to 4
(vi) Moulds and dies
(vii) Refractory and Refractory materials
(viii) Tubes and pipes and fittings thereof used in the factory
(ix) Pollution control equipments
(x) Grinding wheels and the like goods falling under sub heading 6801.10
(xi) Goods falling under no. 68.02 and
(xii) Lubricating oils, greases, cutting oil and coolants.
3. Appearing on behalf of the revenue, ld. DR Shri A. Jayachandran while reiterating the grounds in the appeal submitted that 'plastic crates' cannot be termed as capital goods for availing credit under rule 57Q of Central Excise Rules, 1944. He also submitted that in the case of Parle Beverages Ltd. Vs. CCE - 2000 (124) ELT 803 relied by the Commissioner (appeals) the eligibility of plastic crates were decided in favour of assessee as inputs, since they were used as packing materials for the transportation of the finished goods i.e. aerated water and they were not classified as capital goods. Whereas in the present case the impugned item viz., 'plastic crates' are not used as packing materials but are used for carrying semi finished cops from one department to other within the spinning mill. Therefore the judgment in the matter of Parle Beverages Ltd. is not applicable to the facts of the present case. He therefore submitted that the impugned order may be set aside and the order passed by the Deputy Commissioner may be restored.
4. None appeared on behalf of the respondent-assessee. However they have filed a written submission which was received on 24.3.2004. The respondents submitted that they are not attending the personal hearing and the case may be decided on the basis of the written submission made by them to be read as part of personal hearing to be held on 26.3.2004. The respondents submitted that plastic crates, the subject matter of the dispute is used as a material handling equipment and it is used for the transport of cops from spinning to cone winding and doubling department and the plastic crates are essential in the manufacture of cotton yarn. They further submitted that the plastic crates are used in the manufacture of final products, even though they are not specified as capital goods under Rule 57Q as alleged by the revenue because if the plastic crates are not used, the manufacture of final product is not possible. In this connection they submitted that the dumpers are vehicles falling under chapter heading No. 87.04 and they are not listed in the items mentioned in Rule 57Q as capital goods, however, since the date when this said rule was introduced. However treating the dumpers as an essential material handling equipment for the transport of limestone from the quarry to the factory for the manufacture of cement, the CEGAT, South Zonal Bench, Bangalore in the case of Malabar Cements Ltd. - 2002 (149) ELT 751 (T) has allowed the credit on dumpers. The appeal filed by the revenue against the above decision has been dismissed by the Apex Court in C.A. No. D6551 of 2002 reported in 2003 (153) ELT A94. They therefore submitted that 'plastic crates' are very much eligible for capital goods credit the same way as dumpers have been allowed credit. They further submitted that this Bench in their own case has allowed modvat credit to the plastic crates in terms of Rule 57Q as material handling equipment vide Final Order 98/2004 dated 23.1.2004.
5. I have considered the submissions made by both sides and find that the issue is no longer res integra and plastic crates have already been allowed capital goods credit by this Bench vide Final Order No. 98/2004 dated 23.1.2004 in the case of respondent-assessee itself, where the revenue appeal was rejected by this bench. The findings recorded in para 5 to 8 by this Bench in the respondent-assessee's own case is reproduced herein below for ready reference :
5. I have considered the submissions made by both the sides and gone through the case records and perused the various decisions cited. I observe that the benefit of modvat credit in respect of "plastic crates" has been denied to the assessee on the ground that the item does not figure in the items listed under Rule 57Q at the relevant time. The nature of the item and the use to which it is put by the assessee is not disputed by the revenue. The Commissioner (Appeals) has noted that the item is in the form of material handling equipment which plays the role of carrying the intermediate semi-finished products for the next manufacturing activity. The cops coming out as an out-put from the machinery cannot be held by any other way except to collect it through these plastic crates as otherwise, it will lose its form. The lower appellate authority has relied upon the decision in the case of Pitti Laminations Ltd. Vs. CCE - 2001 (135) ELT 1015 wherein it has been held that Fork lift so ling as they are used for shifting of materials from one place to another within the factory during the course of manufacture of the final product, is to be considered as capital goods in support of his view. The further findings reached by the lower appellate authority reads as under:
"The use of plastic crates for transferring cops from spinning to cone winding, doubling, auto coner or from spinning to reeling is very essential. In spinning, plastic creates are used either on specially designed dotting trollies or customs built carriers mounted on dotting rails. The plastic creates with full cops are transferred to cone winding, doubling, auto coner sections in trollies. These plastic crates are essential in the manufacture of final products. If they not used, the manufacture of final product is not possible. The material handling equipment has been held in the earlier decisions of the Tribunal to be used for producing or processing of goods and hence eligible for credit. The Hon'ble supreme Court in the case of CCE Vs. Jawahar Mills Ltd. reported in 2001 (132) ELT 3 (SC) has held that the goods specified in explanation 1 (c) for availing modvat as capital goods need not be used in the manufacture of final product, the only requirement is that they should be used in the factory of production. In the case of Parle Beveraes Ltd. Vs. CCE reported in 2000 (124) ELT 803 (T) the Hon'ble Tribunal has held that the plastic crates used for transporting the bottles of aerates waters are eligible for modvat credit. So the appellants' case is covered by the above laws."
6. I observe that in the present case, the plastic crate is not one of the items specified under rule 57Q as capital goods. What the Hon'ble Supreme Court in the case of Jawahar Mills (supra) has held was that the goods specified under explanation 1 (c) to Rule 57Q need not be used in the manufacture of final product for availing the benefit under Rule 57Q. In the present case the item Plastic crate is not one of the items specified under Rule 57Q as capital goods. Hence the said decision in my opinion does not help the assessee. In the case of Parle Beverages Vs. CCE (supra) plastic crates were decided in favour of the assessee as inputs, and not capital goods, since they were used as packing material for the transportation of the good.
7. The respondents-assessee have taken a ground in the cross objection that even if plastic crates are not considered as capital goods the same may be considered as packing material and in view of the fact that plastic crates are used for transporting only semi-finished goods and the benefit may be allowed.
8. I note that the Tribunal in the case of CCE Vs. Machino Plastic Ltd. reported in 2001 (132) ELT 71 has held that iron and steel trollies are material handling equipments for producing or processing of goods and eligible for credit under rule 57Q, though the said judgment has held that material handling equipments cannot be considered as inputs for the purpose of Notification No. 217/86-CE. Further, the Tribunal in the case of Grasim Cement Vs. CCE, Raiput reported in 1997(96) ELT 354 has held that Bucket Elevator Pipes and Tubes/Ducts/Metals Bellos Screw are nothing but material handling equipment or parts thereof and hence admissible for the benefit of modvat credit under Rule 57Q. I further find that the Tribunal in the case of Larsen and Tubro Ltd. reported in 1998 (101) ELT 131 has held that material handling equipments such as wagon loader, fork lift trucks, conveyor systems and EOT crane are capital goods as they are integrally connected with the process of manufacture of final product since transfer of raw material and some finished goods from one place to another could not be achieved by manual operation. In the present case, it is not in dispute that the manufacture process of the respondents-assessee is not possible without the said item viz. plastic crates and item is integrally connected with the manufacture of the final product. Following therefore, the ratio of the above noted decisions, I am of the considered opinion that plastic crates cannot be considered as inputs and are to be considered as material handling equipment and are therefore, eligible for benefit of modvat credit under rule 57Q In view of my discussion, I am of the considered opinion that the modvat credit is admissible to the item "plastic crates" in terms of rule 57Q. I, therefore, uphold the impugned order and reject the appeal of the revenue. The Cross objection filed by the respondents also stands disposed of accordingly".
6. By following the ratio of judgment rendered by this Bench the modvat credit is admissible to the item 'plastic crates' in terms of Rule 57Q. I, therefore, uphold the impugned order passed by the ld. Commissioner (Appeals) and reject the appeal filed by the revenue. The Cross-Objection filed by the respondent also stands disposed of accordingly.