Allahabad High Court
M/S Upper Ganges Sugar & Industries Ltd. vs The Commissioner Customs & Central ... on 25 February, 2015
Bench: Sudhir Agarwal, Shashi Kant
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 34 Case :- CENTRAL EXCISE APPEAL No. - 135 of 2005 Appellant :- M/S Upper Ganges Sugar & Industries Ltd. Respondent :- The Commissioner Customs & Central Excise Counsel for Appellant :- Nikhil Agrawal,Bharat Ji Agrawal Counsel for Respondent :- A.S.G.I.,Syed Zafar Moonis Hon'ble Sudhir Agarwal,J.
Hon'ble Shashi Kant,J.
1. Heard Mrs. Rashi Mishra, Advocate holding brief of Sri Bharat Ji Agarwal, learned Senior Advocate appearing for appellant and Sri B.K. Raghuvanshi, learned counsel appearing for respondent department.
2. This appeal under Section 35G(2) of Central Excise Act, 1944 (hereinafter referred to as 'Act, 1944), has arisen from judgment and order dated 14th October, 2004, passed by Customs Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT'), in Appeal No. E/3680/04-NB (SM) connected with Appeals No. E/82/04 and E/83/04-NB (SM), whereby all the three appeals were decided by a common order dated 14th October, 2004. CESTAT has disallowed MODVAT/CENVAT Credit as 'capital goods' on "welding electrodes".
3. Though appellant has formulated six question of law, but, this Court finds that the only substantial question of law which has arisen in the matter is "Whether 'welding electrodes' can be treated to be 'capital goods' under Rule 57Q for the purpose of allowing MODVAT/CENVAT Credit thereon to the appellant assessee during the period of August 1999 to September, 1999?"
4. Dispute relates to the period, August 1999 to September, 1999. Appellant is a public limited company engaged in manufacture of Sugar. Molasses is its by-product. Appellant availed benefit of MODVAT/CENVAT Credit as 'capital goods' on Steel Flat Bar, Ferro Speed and Welding Electrodes during the period of August, 1999 to September, 1999.
5. Superintendent Central Excise, Range Dhampur, issued show cause notice on 21st December, 1999, stating that aforesaid items are not included as 'capital goods' in the table appended to Rule 57Q of Central Excise Rules, 1944 (hereinafter referred to as 'Rules, 1944), hence, credit has been availed in violation of Rule 57Q. Appellant was required to show cause, why credit already availed be not disallowed and recovered under Rule 57U of Rules, 1944 read with Section 11A of Act, 1944.
6. Appellant submitted reply, claiming that it has validly availed credit but Deputy Commissioner, Custom and Central Excise, Division Moradabad rejected explanation and disallowed MODVAT/CENVAT Credit for aforesaid period. Aggrieved thereto, appellant preferred an appeal before Commissioner, Central Excise (Appeals), Ghaziabad (hereinafter referrred to as 'CCE(A)'). The appeal came to be dismissed vide order dated 13.10.2003. Thereagainst, Second Appeal preferred before CESTAT, which has been rejected by order dated 14.10.2004.
7. Tribunal has dismissed appeal for MODVAT/CENVAT Credit in respect to "Welding Electrodes" and "Steel Flat Bars", but has allowed the same in regard to "Winding Wires". Appellant has confined this appeal only in respect to denial of MODVAT/CENVAT Credit to "Welding Electrodes".
8. Learned counsel for appellant vehemently contended that "Welding Electrodes" are 'capital goods' being component of machinery and process of manufacture of sugar in the factory and therefore qualify to claim MODVAT credit under Rule 57Q of Rules, 1944, as it was during relevant period of dispute. On the contrary, learned standing counsel appearing for Revenue clearly stated that neither "Welding electrodes" constitute 'component' nor otherwise is included in any of the items mentioned in the table under Rule 57Q(1), as applicable during period of dispute, hence, Tribunal has rightly denied MODVAT credit to assessee.
9. We have heard learned counsel for parties at length and perused the record as well as relevant provisions and authorities applicable on the subject.
10. The scheme of MODVAT (Modified Value Added Tax) came to be introduced in India w.e.f. 01.03.1986. Section 37 of Act, 1944 was modified and Clause (xiva) was inserted by Section 51 Act 23 of 1986 w.e.f. 1st March, 1986 and Clause (xvib) was inserted by Section 96 of Act 11 of 1987 w.e.f. 12th May, 1987. These clauses read as under :
"(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods;
(xvib) provide for the giving of credit of sums of money with respect to raw materials used in the manufacture of excisable goods;"
11. The scheme was introduced by inserting Chapter AA containing Rules 57A to 57J. Initially MODVAT scheme was introduced with a view to avail credit on duty paid on exisable goods used as 'input' in manufacture of final products. From 1st March, 1987, similar scheme for allowing credit of money in respect of certain raw materials used in manufacture of certain exisable goods was introduced and Chapter AAA having Rules 57K to 57P was inserted. Scheme was further enlarged by inserting Chapter AAAA with Rules 57Q to 57U w.e.f. 01.03.1994 so as to permit availment of credit on duty paid on 'capital goods' which are used in manufacturing process.
12. In the present case we are concerned with credit admissible on 'capital goods' and therefore, we are confining ourselves with the relevant provisions contained in Rule 57Q to 57U, as stood in 1999.
13. All these three Chapters i.e. AA, AAA and AAAA were substituted by Notification No. 6/97-C.E.(N.T.), dated 01.03.1997. Rule 57Q, inserted by notification dated 01.03.1997 as amended in February, 1999, reads as under:
"RULE 57Q. Applicability.- (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the "final products") described in column (3) of the Table given below and to the goods (hereafter, in this section referred to as "capital goods"), described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacturer of final products.
TABLE S. No. Description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer Description of final products 1 2 3 1 All goods falling under heading Nos. 82.02 to 82.11;
All goods specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :-
(i) all goods falling under Chapter 24; and
(ii) all goods falling under heading Nos. 36.05 or 37.06.
[(iii) ingots and billets of non-alloy steel falling under sub heading Nos. 7206.90 and 7207.90, manufactured in an induction furnace unit, whether or not any other goods are produced in such induction furnace, and hot re-rolled products of non-alloy steel falling under sub-heading Nos. 7211.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90 on which duty is paid under Section 3A of the Central Excise Act, 1944 (1 of 1944).] 2 All goods falling under Chapter 84 (other than internal combustion engines falling under heading No. 84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under heading No. 84.14 and of a kind used in refrigerating and airconditioning appliances and machinery, heading or sub-heading Nos. 84.15, 85.18, 8422.10, [8424.10, fire extinguishers falling under sub-heading No. 8424.80, 8424.91, 8424.99], 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub heading No. 8481.10 of a kind used for referigerating and airconditioning appliances and machinery);
3All goods falling under chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40;
4All goods falling under heading Nos. 90.11 to 90.13, 90.16, 90.17, 90.22 (other than for medical use), 90.24 to 90.31 and 90.32 (other than of a kind used for refrigeration and airconditioning appliances and machinery;
5Components, spares and accessories of the goods specified against S. Nos. 1 to 4 above;
6Moulds and dies;
7Refractories and refractory materials;
8Tubes and pipes and fittings thereof, used in the factory;
9Pollution control equipment;
10Grinding wheels and the like goods falling under sub-heading No. 6801.10;
11Goods falling under heading No. 68.02; and 12 Lubricating oils, greases, cutting oils and coolants.
(2)(i) The manufacturer of the final products shall be allowed credit of the duty of excise or the additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as "specified duty") paid on the capital goods.
(ii) The manufacture availing of the credit may utilise the same for payment of duty of excise payable on the final products manufactured in his factory.
(3) Notwithstanding anything contained in sub-rule (1), the manufacturer of the final products shall be allowed credit of additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) on goods falling under Chapter heading No. 98.01 of the first schedule to the said Customs Tariff Act, to the extent of 75% of the said additional duty paid on such goods.
(4) A manufacturer of the final products purchasing capital goods from a unit situated in a Free Trade Zone or from a hundred per cent export-oriented undertaking or from a unit in an Electronic Hardware Technology Park or Software Technology Parks and using them in the manufacture of final products, shall be allowed to take the credit of the specified duty paid on such capital goods only to the extent of duty which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975), equivalent to the duty of excise paid on such capital goods.
(5) The credit of the specified duty on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 1st day of March, 1997) shall not be allowed if such capital goods were received in the factory before the 1st day of March, 1997.
(6) A manufacturer shall be allowed credit of specified duty paid on capital goods manufactured by him for the manufacture of final products in his factory.
(7) The credit of the specified duty on capital goods [other than those capital goods covered under S. Nos. 5, 7, 10, 11 and 12 of column (2) of the Table below sub-rule (1)] and received in the factory on or after the 1st day of January, 1996, shall not be taken on a date prior to the date on which such capital goods are installed or, as the case may be, used for manufacturer or a person designated by him for this purpose.
(8) Notwithstanding anything contained in sub-rule (7), a manufacturer intending to remove the capital goods from his factory for home consumption or for export, prior to their being installed or used, as the case may be, shall be allowed to take credit on the date on which such capital goods are so removed by him from his factory on payment of the appropriate duty of excise leviable thereon as provided in rule 57S." (emphasis added)
14. Capital goods which fall within items described in column 2 of table, used in factory for manufacturing final products described in column 3, are allowed credit.
15. We noticed from order of Tribunal that it has considered three appeals togather, covering period August, 1999 to September, 2001 and has taken care that provision prior to 01.04.2000 i.e. Rule 57Q was different and after 01.04.2000, statutory provision came into force was much different. Rules 57A to 57U were substituted by Notification No. 11/2000-CE(N.T.) dated 01.03.2000 w.e.f. 01.04.2000. Admittedly, subsequent amendments and substituted rules would have no application to the case in hand.
16. It could not be disputed before this Court that in Rule 57Q, as it was in August/September, 1999, Chapter 83 was not specified as 'capital goods' on which credit was available. "Welding electrodes" came under heading no. 83.11 but this was not specified in Rule 57Q of Rules, 1944 as eligible heading for taking credit as 'capital goods'.
17. When enquired from learned counsel for appellant, it could not be disputed that under various headings and chapters of Central Excise Tariff Act, which are referred in column 2 of table under Rule 57Q of Rules, 1944, items in Chapter 83 are not included and therefore apparently those items are not admissible for claiming MODVAT credit. It is however, then contended that under Rule 57Q(1), items mentioned in column 5 of the table, are certain goods which are within ambit of allowing credit, irrespective of heading of Chapters of Central Excise Tariff Act. The only requirement in respect to the items mentioned at serial no. 5 in table under Rule 57Q (1), is that they must qualify to be either as 'components', 'spares' and 'assessories' of the specified goods under serial no. 1 to 4, then those items shall also be admitted for allowing 'credit'. It is further contended that "Welding Electrodes" would be covered by the term 'components' for the reason that it is used in the process of manufacturing sugar, therefore, is entitled to claim MODVAT credit.
18. Learned counsel for appellant drew our attention to annexure no. 9 to the paper book, where usuages of 'electrodes' in sugar factory have been explained. It is said that 'electrodes' in general are used to harden the surface of mill rollers at different intervals, so that smooth crushing of cane can be carried out. The said items are also used with sugar mills machinery i.e. milling tendum, sugar mill rollers, journal, cushion layer on jaw crushers hammers, stainless steel parts of sugar mill machinery such as pump sleeves, sulphur burner, pan condenser and its pipes, valve bodies, motor bodies, cane juice pumps, hosing, trash plates, scrappers and also pipe lines of above machinery.
19. In respect to welding electrodes, it is specifically said that same are used with sugar mill machinery. Welding Electrodes Grade ESAB Ferro speed are used to weld mild steel and general purpose like harden the surface of mill rollers, trash plates, scrappers etc. so that smooth crushing of cane can be carried out. Welding Electrodes Grade Valmet-586-FG are used to weld gears, tool steels, shaft and cushion layer and jointing steel to other steels etc. Welding Electrodes Grade Valstain-C, a versatile low heat input electrodes with unique 'metaionic' coating having superior alloys combination used to joining and cushioning of medium, high carbon, low and high alloy steels and stainless steel and are used to weld sugar mill roller journal, cushion layer on jaw crushers hammbers and repairs of tools etc. Welding Electrodes Grade castomac-238 are high strength special cast iron Electrodes used to weld cast iron to mild steel equipments like pump casing, valve bodies, motor bodies etc. These type of Welding Electrodes are used to filling cavities during use of the machinery. It has also been used at the time of installation of machinery and repair of the machines. Welding Electrodes grade Valmet-26 are used for welding cast iron parts of cane juice pumps, housing etc. Welding Electrodes Grade Valmet-308-L are used for welding of stainless steel parts of sugar mill machinery such as pumps sleeve, sulphur burner pipe lines, pan condenser and its pipe etc.
20. It was also argued that "Welding Electrode" has been held entitled for credit by various Tribunals at New Delhi, Mumbai, Bangalore and reliance was also placed on two judgments of Apex Court in Collector of Central Excise, Raipur Vs. Birla Jute Industries Ltd. [2002 (139) ELT 93 (SC)] and Collector Central Excise Coyambatore Vs. Jawahar Mills Ltd. [2001 (132) ELT 08].
21. The manner in which appellant has explained to bring "Welding Electrodes" within the term 'component', in order to analyse the same we have to examine first, what a 'component' is. We may notice at this stage that sofar as Tribunal is concerned, it has rejected even this argument, observing that 'Welding Electrodes' does not fall within term 'component' of goods specified at serial nos. 1 to 4.
22. In M/s Star Paper Mills Ltd. Vs. Collector of Central Excise, Meerut [1989 (4) SCC 724], Court has considered meaning of 'component parts' contained in exemplar notification dated 4th June, 1979, modified by notification dated 28th February, 1982. In absence of any definition otherwise, the Court referred to dictionary meanings and said :
"According to the Webster Comprehensive Dictionary, International Edition the word "component" inter alia means a constituent part." (emphasis added)
23. The term 'component' again was considered in Commissioner of Central Excise, Delhi Vs. M/s Allied Air-Conditioning Corporation (Regd.) (Judgment Today 2006 (09) SC 331]. Here the dictionary meaning of 'component', as referred in Star Paper Mills Ltd. (supra), was reproduced.
24. Both the aforesaid authorities were considered in a recent decision in Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi [JT 2011 (8) SC 547]. Therein question up for consideration was "whether iron and steel structures manufactured and used captively in factory for installation of sugar manufacturing plant by assessee can be classified as 'capital goods' under Rule 57Q of Rules 1944". There also dispute relates to period from July, 1999 to September, 1999. Assessee claimed benefit of credit under Notification dated 16th March, 1995 read with Rule 57Q of Rules, 1944. Notification No. 67/95-CE, dated 16th March, 1995 considered by Court, reads as under :-
"In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 the Central Government being satisfied that it is necessary in the public interest so to do hereby exempts
(i) capital goods as defined in Rule 57Q of the Central Excise Rules 1944 manufactured in a factory and used within the factory of production.
(ii) .......
from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)" (emphasis added)
25. In Saraswati Sugar Mills (Supra), the Court found that sofar as notification dated 16th March, 1995 is concerned it was confined to only such 'capital goods' which are manufactured in a factory and used within factory for production. If these twin conditions are satisfied, 'capital goods' are exempted from payment of excise duty. Court said that exemption notification has to be strictly construed and conditions for taking benefit under notification are also to be strictly interpreted. Courts are not expected to stretch words of notification or add or subtract words in order to grant or deny benefit of exemption notification. In the case in hand, this notification is apparently inapplicable.
26. Then coming to Rule 57Q, expression 'component' was considered by Court in Saraswati Sugar Mills (supra) by referring to disctionary meaning. In paragraphs no. 10, it said :-
"10. The expression "components" is not defined under the Act. Therefore, reference can be made to dictionaries to understand the meaning of the expression "components". In Webster Comprehensive dictionary, it is defined as 'Constituent part'. In Oxford Advanced Learner's Dictionary, Volume 1, international Edition, the word "component" means a 'constituent part'. Further, 'constituent' means serving to form or compose as a necessary part'. In Advanced Law Lexicon, 3rd Edition 2005, (by P. Ramanatha Aiyar), the word 'component part' is defined as something which becomes an integral part of the goods in question by losing its physical and economic distinctiveness'. It defines 'constituent' (of a component) as that helps made up or complete a unit or a whole's one part of something that makes up a whole'. Encyclopaedic Law Lexicon, Volume 200809 Edition, by Justice C.K. Thakkar, describes the 'components' as : 'It appears, therefore, that for an article to be called a component part, it is not necessary that even it becomes part of another article, it should still retain its identity. All that is necessary to make an article, a component part is that it goes in to the composition of another article. If an article is an element in the composition of another article made out of it, such an article may well be described as a component part of another article. It may be that the final product made may be in the nature of a compound in which case, the elements forming component parts may not be capable of any more separate identification. Equally, it may be that when a machinery is assembled out of several parts forming that machinery, those machinery, those parts, even after there being filled may retain their individuality or identity'.(emphasis added)"
27. Again elaborating term 'component', Court in Saraswati Sugar Mills (Supra) said in paragraph no. 12 and 13 as under :-
"12. In order to determine whether a particular article is a component part of another article, the correct test would be to look both at the article which is said to be component part and the completed articles and then come to a conclusion whether the first article is a component part of the whole or not. One must first look at the article itself and consider what its uses are and whether its only use or its primary or ordinary use is as the component part of another article. There cannot possibly be any serious dispute that in common parlance, components are items or parts which are used in the manufacture of the final product and without which, final product cannot be conceived of.
13. The meaning of the expression 'component' in common parlance is that 'component part of an article is an integral part necessary to the constitution of the whole article and without it, the article will not be complete'." (emphasis added)
28. Court thus held that iron and steel structures could not be said to be components until they are utilized as component parts for the finished products. It also disapproved Tribunal's reasonings, otherwise given in Delhi Tribunal's judgment in Simbhaoli Sugar Mills Vs. Commissioner Central Excise [2001 (135) ELT 1239].
29. Looking to the aforesaid tests and observations made in Saraswati Sugar Mills (supra) and applying the same to "Welding Electrodes" to find out whether it would qualify to be 'capital goods', we find that as per own admission of appellant, these 'Electrodes' are used for welding of machines and machine parts which form part of repair work. If there is no damage in machine or no welding is required, "Welding Electrodes" would not be used at all. Meaning thereby, it fails the test of being a constituent of machine etc. or the manufacturing process of finished goods. It thus cannot be said that "Welding Electrodes" form constituent of plant and machinery. One user mentioned is hardening of surface of mill rollers, trash plates, scrappers so that smooth crushing of cane can be carried out. Meaning thereby, that though machines are otherwise workable for the purpose of manufacture of sugar, for smooth functioning, "Welding Electrodes" are used to form a layer over the surface of mill rollers etc. to harden it. It does not mean that without user of 'Electrodes', the machines are unworkable. Some times when regular use of machines having larger surface area, said surface becomes coarse, the 'Electrodes' are used to make surface hard and smooth, but, that is again a part of repair of the machines and it cannot be said that without user of 'Electrodes' these machines cannot be used, as such for the purpose of obtaining finished goods. These facts leave no manner of doubt in our mind and by no stretch of imagination it can be said that "Welding Electrodes" constitute an integral part necessary to the constitution of whole article and without which, article would not be complete, as observed by Apex Court in paragraph no. 13 of the judgment in Saraswati Sugar Mills (supra). Consequently, we are of the view that present matter is squarely covered by what has been said by the Court in Saraswati Sugar Mills (Supra) and applying observation and test laid down therein it cannot be said that "Welding Electrodes" satisfy the requirement so as to constitute 'component' of items mentioned in column nos. 1 to 4 of table in Rule 57Q(1) of Rules, 1944.
30. Now we propose to consider, whether appellant can have some assistance from the decision in Commissioner of Central Excise Vs. Jawahar Mills Ltd. (Supra). This mater came before Supreme Court from Tribunal New Delhi, Bench's judgment in Jawahar Mills Vs. Commissioner Central Excise, 1999 (108) ELT 47. Judgment of Tribunal is also on record as annexure no. 17 to the paper book. Therefrom, we find that disputed period was March, 1994 to October, 1994. Assessee was denied MODVAT Credit on 'power cables' and 'capacitors'. There were two views of Tribunal in two different matters, therefore, issue was considered by a larger bench of Tribunal at New Delhi. Obviously, Rule 57Q, up for consideration therein, was the one as inserted/introduced for the first time by notification dated 01.03.1994. There the term 'capital goods' was specifically defined in explanation 1 to Rule 57Q of Rules, 1944. This explanation 1, as initially introduced, was substituted by notification dated 23rd July, 1996. However, it is not there on the statute book on amendment made in 1997 which is up for consideration in this appeal.
31. Tribunal construed explanation defining 'capital goods' liberally and answered question in favour of assessee. In appeal, Apex Court agreed with the view that language used in explanation is liberal and substantially wide to include said items. Paragraph no. 4 of the judgment in Commissioner of Central Excise, Coimbatore (supra), read as under :
"4. The aforesaid definition of 'Capital goods' is very wide. Capital goods can be machines, machinery, plant, equipment, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be 'Capital goods', and, therefore, qualify for availing Modvat credit. Per clause (b), the components, spare parts and accessories of the goods mentioned in clause (a) used for the purposes enumerated therein would also be 'Capital goods' and qualify for Modvat credit entitlement. Clause (c) makes moulds and dies, generating sets and weigh bridges used in the factory of the manufacturers as capital goods and thus qualify for availing Modvat credit. The goods enumerated in clause (c) need not be used for producing the final product 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 product and the only requirement is that the same should be used in the factory of the manufacturer. Thus, it can be seen that the language used in the explanation is very liberal. "
32. Aforesaid judgment in our view, has no application in the case in hand. The decision relied by appellant in Collector of Central Excise Vs. Birla Jute Industries Ltd. (supra), infact has followed earlier decision in Collector Central Excise Vs. Jawahar Mills Ltd. (supra) and dismissed the appeal of Revenue, confirming decision of Tribunal in which "Welding Electrodes" were held 'inputs' to qualify for MODVAT credit, which is not the case in hand. In the present case, credit is being claimed on the ground that "Welding Electrodes" constitute 'capital goods' entitled for MODVAT credit under Rule 57Q and not as 'inputs'. Therefore, aforesaid judgment also has no application.
33. There are some more authorities which have been referred to and the same may also be discussed hereat.
34. In Collector of Central Excise and Others Vs. Solaris Chemtech Ltd. and Others [2007 (7) SCC 347], assessee was manufacturing final products like 'caustic soda' and 'cement'. It claimed MODVAT Credit under Rule 57A of Rules, 1944 on "Low Sulfur Heavy Stock" (LSHS) and "furnace oil" used for generating electricity captively consumed for manufacture of final products. Assessee in fact used aforesaid items as 'fuel' for generating electricity which in turn is captively consumed for production of caustic soda and cement. Question was "whether aforesaid 'fuel' could be treated to be 'input' to attract credit under Rule 57A as it stood in 1994-95". The Court found that explanation to clause C, introduced in Rule 57A by notification no. 4/94, refers to 'input' used as 'fuel'. Court noted that Government also made it clear that 'inputs' used as 'fuel' were entitled to MODVAT credit. The aforesaid decision relates to 'input' under Rule 57A and has no applicability to the case in hand.
35. There is a three Judge judgment in Vikram Cement Vs. Commissioner of Central Excise, Indore [2006 (2) SCC 351], but therein also CENVAT Credit was claimed on 'explosives' and other 'inputs' under CENVAT Rules, 2000, which replaced MODVAT Rules. The question up for consideration before the Court was whether MODVAT and CENVAT are basically same concepts or different. The Court considered earlier Rules relating to MODVAT credit and subsequent Rules relating to CENVAT Rules and found that it was only re-arrangement of earlier Rules, but, in substance both are common and not different. The otherwise view taken in Commissioner of Central Excise, Jaipur Vs. J.K. Udaipur Udyog Ltd. [2004 (171) ELT 289 (SC)], was over ruled. This decision, in our view, also has no application to facts of present case.
36. In K.C.P. Ltd. Vs. Commissioner of Central Excise, Chennai [2014 (1) SCC 597], Court held that assessee was not entitled for any MODVAT credit for the reason that it did not use purchased machinery in its factory and therefore, necessary condition incorporated in Rules for availing credit of MODVAT was not complied with. To avail MODVAT credit, 'input' on which excise duty is paid must be used in manufacturing final products in the factory of assessee. The aforesaid decision also has no application to dispute in question. The issue up for consideration before this Court was not involved therein. Therefore, aforesaid judgment renders no assistance in the case in hand either way.
37. At this stage, counsel for appellant sought to place reliance on a reference order of Apex Court in Ramala Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Meerut [2010 (14) SCC 744], whereby Court has expressed doubt on the correctness of an earlier decision in Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi [2009 (9) SCC 139] and matter has been referred to larger bench. Having gone through the aforesaid decision we find that in Maruti Suzuki Ltd. (supra), question up for consideration was whether 'naptha' used in generating electricity for captive consumption and sold outside factory would fall within the definition of 'input' under Rule 2(g) of CENVAT Credit Rules, 2002 or Rule 2(k) of CENVAT Credit Rules, 2004. Period of dispute therein was January, 2003 to October, 2003 and November, 2003 to March, 2004. The dispute therein and question up for consideration therein was different and different provisions were considered. The issue therein, in our view, has no concern to the case in hand. Therefore, aforesaid decision or reference order would not help appellant in any manner.
38. In the result, question formulated above is answered in favour of revenue and against assessee.
39. Appeal is accordingly dismissed. There shall be no order as to costs.
Order Date :- 25.2.2015 A. Verma