Customs, Excise and Gold Tribunal - Delhi
Modi Tyre Factory vs Commissioner Of C. Ex. on 10 September, 1999
Equivalent citations: 2000(116)ELT132(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. This appeal has been filed against the Order-in-Appeal dated 31-8-1998 passed by the Commissioner (Appeals), Central Excise, Ghaziabad, by which Modvat credit on 'Pressure Switches, Pumps & Nuts, Spares of Fans and Regulators and Pressure Gauges' had been disallowed by the Commissioner (Appeals) reversing the order of the Asstt. Commissioner.
2. Ld. Counsel for the appellants Shri K. Srinivas submits that the items are parts of boilers. The Department itself has accepted this position in paragraph 2 of the authorisation given by the Commissioner of Central Excise, Meerut under Sub-section (2) of Section 35E. The said authorisation refers to the items as 'spare parts of boilers'. Ld. Counsel then refers me to the Tribunal order in the Commissioner of Central Excise, Meerut v. Triveni Engineering Works [1997 (96) E.L.T. 655 (Tribunal)], in which it was noted that Boiler is an integral part of plant and machinery used in the manufacture of sugar. Since boiler is already held to be an integral part of plant and machinery, and it had also been held that boiler is capital goods and entitled to Modvat credit, parts of boiler would also be eligible for availing Modvat credit. He, therefore, submits that the appellants' case is fully covered in their favour and therefore the impugned order holding that the items are spares and therefore not admissible to Modvat credit at the relevant time, cannot be sustained. Ld. Counsel also re-fers to the Larger Bench decision of the Tribunal in Jawahar Mills case reported in 1999 (108) E.L.T. 47 (Tribunal), in which in paragraph 31, the Larger Bench had distinguished the decision of the Tribunal in Shanmugaraja Spinning Mills v. C.C.E. [1998 (98) E.L.T. 702]. The impugned order had relied on the decision in Shanmugaraja Spinning Mills case for rejecting the appellants' claim for allowing Modvat credit on the disputed goods.
3. Shri T.A. Arunachalam, ld. JDR does not dispute the position that the items under dispute are parts of boiler, as the Commissioner himself has in the authorisation order stated that it is so. However, he draws attention to the fact that the Larger Bench in Jawahar Mills has not directly overruled the decision in Shanmugaraja Spinning Mills but only distinguished its decision for purpose of disposing of the issues raised before the Larger Bench. He submits that the impugned order had found that the goods were not directly used in processing or manufacturing the final product and the nexus between the use of the capital goods and the production of the final products has not been established.
4. I have considered the submissions made by both sides. Since the Tribunal has already taken the view in Triveni Engg. Works case (supra) that boiler is an integral part of the plant and machinery used in the manufacture of sugar and boiler is capital goods and entitled to Modvat credit in accordance with the relevant rules, in the admitted position in the present case that the items in dispute are parts of boiler, I find that the impugned order cannot be sustained in view of the admitted factual position about the nature of the items.
5. At this point ld. JDR points out that as regards the quantification of Modvat credit involved, the exact Modvat credit involved in the case was not more than 22,538.50. Rs.1,16,180.70 as claimed by the appellants in the Form EA III was not correct.
6. Ld. Counsel for the appellants in reply submitted that the appeal may be allowed in principle and quantification of duty demand may be worked out. He submits that while granting the consequential reliefs, the authority concerned may be directed to work out the exact amount on the basis of material available on record.
7. In the light of the above, I allow the Appeal. While granting the consequential benefits the authorities concerned will no doubt examine the actual amount of Modvat credit admissible in the light of the observations made in the earlier part of the Order.
8. Appeal allowed in above terms.