Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Tablets India Limited on 3 March, 2000
Equivalent citations: 2000(93)ECR381(TRI.-CHENNAI), 2001(138)ELT1436(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. Brief facts of the case are as follows.
2. The respondents were engaged in the manufacture of Pharmaceutical products and were availing the facility of Modvat credit on capital goods under Rule 57Q of the Central Excise Rules during the period of dispute (September, 1995). The jurisdictional Assistant Commissioner disallowed the capital goods credit to the tune of Rs. 3,35,288/- taken by the Respondents during the said period, on the ground that the said goods did not fall under the category of capital goods under Rule 57Q. In the appeal filed by the aggrieved party against the Assistant Commissioner's order of adjudication, the lower appellate authority passed its order dated 19.10.1997 holding that the goods in question were eligible as capital goods for the credit under Rule 57Q and reversing the order of adjudication. The Department has come in appeal against this order of the Commissioner (Appeals).
3. I have carefully examined the impugned order and connected records of the case. I have also heard the Ld. D.R. appearing for the Revenue and the Ld. Counsel for the Respondents. The Ld. D.R. has reiterated the grounds of the appeal. He has admitted the fact that all the goods in question namely vapour absorption heat pump (falling under Chapter sub-heading 8418.00), Motor (falling under chapter sub-heading 8501.00) and Cooling tower (falling under chapter sub-heading 8419.00) were used by the Respondents in their Central air conditioning plant to maintain temperature of the atmosphere required for the manufacturing process. The Ld. D.R. has however challenged the applicability of the decision of the Tribunal which was relied upon by the lower appellate authority i.e. the decision in the case of CCE v. Modi Xerox Ltd. . The Ld. DR has also relied upon the decision of the Tribunal in the case of CCE Coimbatore v. Titan Industries Ltd. wherein the Tribunal held that Modvat credit was not allowable to air conditioner under Rule 57Q of the Central Excise Rules. The Ld. D.R. has, relying on the case of Titan Industries Limited, submitted that the order of the Commissioner (Appeals) is liable to be set aside and the present appeal to be allowed.
5. The Ld. Counsel for the Respondents has opposed the above submissions of the Ld. D.R. He has submitted that the decision of the Tribunal in the case of Titan Industries Ltd. (supra) is no longer good law in the light of the decision of the Tribunal's Larger Bench decision in the case of Jawahar Mills Ltd. v. CCE, Coimbatore . He has further submitted that the decision of the Tribunal in the case of Modi Xerox Ltd. (Supra) was in relation to chilled water coils used as component parts of air handling unit meant for bringing down the temperature in the coating rooms in the assessees' factory and the Tribunal held the said item to be capital goods eligible for Modvat credit under Rule 57Q of the Rules. According to the Ld. Counsel, the issue involved in the present case is squarely covered in favour of the Respondents by the decision of the Tribunal in the case of Jawahar Mills Ltd. (Supra). He has therefore prayed for rejecting the Appeal.
6. I have carefully considered the rival submissions. I find that the Department has accepted the fact that all the goods in dispute were used in the Central Air Conditioning plant to maintain the temperature of the atmosphere for the process of manufacture in the Respondent's factory. The Respondents are manufacturers of pharmaceutical products, which require certain atmospheric conditions of temperature etc. in accordance with the provisions of Drugs and Cosmetics Act. The temperature of the atmosphere for the manufacture of such product is maintained by means of the Central Airconditioning Plant. All the goods in dispute are admittedly parts of the said plant. As per the provisions of the Explanation to Rule 57Q(1) of the Central Excise Rules, all components, parts and accessories of plants, machines and machinery are capital goods, eligible for Modvat credit under the said Rule. In this view of the matter, I am unable to find fault with the decision of the lower appellate authority who held all the goods to be eligible capital goods for the Modvat credit. On a perusal of the decision of the Larger Bench of the Tribunal in the case of Jawahar Mills Ltd. (supra), I note that the Larger Bench had considered the Tribunal's earlier decision in the case of Shunmugaraja Spinning Mills Pvt. Ltd. wherein the. Tribunal had held that humidifiers used for controlling humidity conditions of atmosphere for the manufacture of textile yarns were not used in the manufacturing process and hence not eligible capital goods for Modvat credit. The Tribunal's Larger Bench has held that the decision in the case of Shunmugaraja Spinning Mills P. Ltd. (Supra) was made without taking note of relevant rulings of the Supreme Court. Therefore, the Tribunal's decision in the case of Shunmugaraja Spinning Mills P. Ltd. is not good law after the decision of the Larger Bench in the case of Jawahar Mills Ltd. The position of humidifier in "Shunmugaraja Spinning Mills" is analogous to air conditioning plant in the instant case. Therefore, the ratio of the Larger Bench in the case of Jawahar Mills Ltd. is squarely applicable to the issue involved in the instant appeal for holding that the parts of the air conditioning plant used in the process of manufacture of pharmaceutical products in the Respondent's factory are eligible as 'capital goods' for the Modvat credit under Rule 57Q of the Central Excise Rules. The order of the lower appellate authority is in keeping with this settled position of law and has, therefore, to be upheld. Accordingly, I do not find any merit in the Revenue's Appeal and I reject the same.
(Order dictated and pronounced in the open court).