Custom, Excise & Service Tax Tribunal
M/S. Pallipalayam Spinners Pvt. Ltd vs Cce, Chennai on 30 May, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/121/2006
(Arising out of Order-in-Appeal No. 189/2005-CE (SLM) dated 14.11.05 passed by the Commissioner of Central Excise (Appeals), Salem).
For approval and signature
Honble Shri P. KARTHIKEYAN, Member (Technical)
_______________________________________________
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M/s. Pallipalayam Spinners Pvt. Ltd : Appellants
Vs.
CCE, Chennai : Respondent
Appearance Ms. A.B. Manju , Adv., Shri. M.N. Bharathi, Adv., for the appellants Shri B.L. Meena, SDR, for the respondent CORAM Shri P. KARTHIKEYAN, Member (Technical) Date of hearing : 30.05.08 Date of decision : 30.05.08 Final ORDER No._____________/2008 M/s. Pallipalayam Spinners Pvt. Ltd., (PSL) Erode, was ordered to pay back Rs. 39,197/- availed by them as 50% of the duty paid on plastic crates between 7/2000 to 10/2003. PSL are engaged in the manufacture of cotton yarn and man made yarn. The impugned plastic crates are used within the mill to transfer the yarn from one section to another section in the process of completing the manufacture of final products cleared by it. The appellants rely on a decision of the Bangalore Bench of the Tribunal in CCE, Calicut Vs. Keltron Component Complex Ltd. reported in 2005 (191) ELT 580 (Tri.- Bang.) in support or their claim that plastic crates are capital goods and they are eligible for credit of duty paid on them.
2. Canvassing the prayer, the Ld. Counsel for PSL submits that the statutory definition of capital goods covers various machinery including the textile machinery deployed in the manufacture of cotton yarn and man made yarn, their components and accessories. Even though capital goods are defined as goods falling under specified chapters in Rule 2 (b) of Cenvat Credit Rules, 2002, components and accessories of such machineries were also capital goods irrespective of the classification. The plastic crates in question are used in the mills for transferring various intermediate products to complete the process of manufacture of the final product cotton yarn and man made yarn cleared. Their case was squarely covered by the decision of the Tribunal in CCE, Calicut Vs. Keltron Component complex Ltd. (supra). She also relies on the decision of the Tribunal in GKN Sinter Metals Ltd. Vs. CCE, Pune-I reported in 2008 (224) ELT 5650 (Tri.-Mum.), wherein plastic crates used for storing raw materials were treated as inputs and allowed credit. It is argued that like in that case the impugned plastic crates are used for handling intermediate products in the instant case. A copy of the decision of the Tribunal in CCE Vs. Cheran Spinners reported in 2004 (168) ELT 174 (Tri.-Chen.) is submitted wherein the impugned plastic crates used for carrying cops within the factory were considered as material handling equipment eligible for benefit of modvat credit under Rule 57Q of the erstwhile Central Excise Rules, 1944 (CER).
3. The Ld. SDR relies on a decision of a Honble Single Member of this Tribunal in the case of CCE Vs. PKPN Spinning Mills (P) Ltd. reported in 2005 (192) ELT 541 (Tri.-Chen.), wherein it was held that plastic crates used as material handling equipment could not be treated as input nor the same were capital goods. The Ld. SDR prays that the impugned order may be sustained and the appeal filed by PSL be dismissed. In his rejoinder, the Counsel submits that the order of the Tribunal relied on by the SDR has been stayed by the Honble High Court of Madras vide their judgment dated 3.1.06 in CMA 4162/2005.
4. I have carefully considered the case records and submissions by both sides. In the only order of the division Bench submitted by both sides on the dispute, it was held that plastic crates used in a factory for collecting and shifting outputs of one machine to the next stage of production have to be treated as accessories of the machinery employed in the production process. The Tribunal relied on the judgment of the Apex Court in Mehra Brothers Vs. Joint Commercial Officer reported in 1991 (51) ELT 173 (S.C.) to understand the scope of the expression accessories, they found that the Apex Court had held an accessory to be any of several mechanical devices that assists in operation of the particular machinery. The same item may be accessory of more than one kind of instrument. The Court had accepted the meaning of the accessories as an object or device that is not essential in itself but that adds to the beauty or convenience or effectiveness of something else or was a supplementary or secondary to something of greater or primary importance which assist in operating or controlling or may serve as aid are accessories. The Tribunal held that plastic crates were nothing but accessories to the various machines used in the manufacture of capacitors and resistors by the appellants in that case. It was held that plastic crates were a necessary accessory required for effective handling of capacitors and resistors.
5. On the instant case, cotton yarn ad man made yarn at its intermediate stages received the outputs of different machines are collected in plastic crates for taking the intermediate product from one state of manufacture to the next stage of manufacture. In the absence of container like plastic crates in the instant case, manufacture of the final product cotton yarn and man made yarn will be highly inconvenient. Plastic crates have therefore, to be held as accessories to the textile machinery employed in the factory of the appellant in the manufacture of the final product. Therefore, the impugned goods satisfy the definition of Rule 2 (b) of CCR. I therefore, find the impugned order not in accordance with law and vacate the same and the appeal filed by PSL is allowed.
(Order dictated and pronounced in the open Court) (P. KARTHIKEYAN) MEMBER (T) BB 2