Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Birla Vxl Limited on 4 November, 1999
Equivalent citations: 2000(115)ELT406(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. Appeal Nos. E/825 to 827/99-NB (D) pertain to disallowance of Modvat credit on wires and cables as capital goods in terms of Rule 173Q whereas Appeal Nos. E/672 & 673/99-NB (D) pertain to disallowance of Modvat credit on vacuum circuit breaker as capital goods in terms of Rule 57Q. The lower authorities held that these items are capital goods whereas the Department has filed an appeal against the findings of the authorities below claiming that they are not capital goods for the purpose of Modvat credit under Rule 57Q of the Central Excise Rules, 1944. The reasons adduced by the Revenue are that insofar as vacuum circuit breakers are concerned, they cannot be considered as a part and component of the plant/machinery if it has a specific functional utility with reference to the plant and the machine. It has been contended that circuit breaker makes and breaks the circuit under normal condition; that it also isolates and protects the electrical system during fault condition and as such cannot be said to be used for processing or producing of any goods or bringing about any change in any substance for manufacture of final products. The Department also has contended that Modvat Scheme on capital goods underwent a change and the definition of capital goods was substantially modified and changed by issue of Notification No. 14/96-C.E. (NT), dated 23-7-1996; that in the new Scheme the goods specified under Clause (a) to (h) of the Explanation if used in the factory were entitled to the Modvat as capital goods irrespective of whether they are used in the factory for producing of any goods or for bringing about any change in any substance for the manufacture of the finished excisable goods. It was also contended that this amendment effective from 20-3-1976 cannot be given retrospective effect as was held by the Hon'ble Supreme Court in the case of East Punjab Traders. It has also been contended by the Department that the meaning of capital goods in terms of Rule 57Q is restrictive and not exhaustive. Therefore, the words used in the explanation are to be construed strictly.
2. In other two appeals, the items involved are electrical wires and cables. The authorities below allowed Modvat credit on these items as capital goods. The Department has, however, come up in appeal on the ground that wires and cables merely supply electricity to the capital goods. That during the material period, the definition of capital goods was restrictive and included machine, machinery, plant, equipment, apparatus, tools, appliances as well as their components, spares, parts and accessories. It has also been contended that these are not for producing or for processing of any goods or for bringing about any change in any substance. The Department has contended that accessory had been defined by the Apex Court in the case of Anna-puma Carbon Ind. Co. v. State of Andhra Pradesh 1976 (37) STC 378 (S.C.). It has also been contended that insulated wires and cables were not covered under any Heading or sub-heading given in the Explanation under Section 57Q. It has also been contended that the Tribunal has already accepted that a point of law arises in holding whether wires and cables were covered by the Explanation or not.
3. Shri R. Sudhinder, the learned Counsel appearing for the respondents at the outset submits that both wires and cables and electrical circuit breakers are specifically covered by the decision of the Larger Bench of this Tribunal in the case of Jawahar Mills v. C.C.E., Coimbatore - 1999 (108) E.L.T. 47 (T). He submits that all the points taken in the Grounds of Appeal by the Department have already been dealt with by the Tribunal in this order. He submits that in the order of the Larger Bench of this Tribunal, wires and cables nave specifically been considered as capital goods eligible lor Modvat credit under Rule 57Q. He submits that insofar as vacuum circuit breakers are concerned, they are covered as electrical equipment. He submits that during the material period under Sub-clause (a) of Clause 1 of Rule 57Q, it was not only the complete plant, machinery, machines covered but also equipment, apparatus and appliances were covered. He submits that vacuum circuit breakers can be termed as equipment, apparatus, appliances or component and since all these items were specifically covered by the Explanation under Rule 57Q, therefore he submits that their case is fully covered by the decision of the Larger Bench of this Tribunal and prayed that the impugned order may be upheld and the appeal may be rejected.
4. For the appellant, Shri M.M. Dubey, learned Departmental Representative reiterated the grounds set out in the appeal but also submitted that insofar as vacuum circuit breakers are concerned, they are not specifically covered by the Larger Bench decision in the case of Jawahar Mills. He submitted that all electrical items cannot be capital goods for that matter all items cannot be capital goods. He submits that the same item may be capital goods for one purpose as used but cannot be capital goods if it is used for a different purpose. He submits that vacuum circuit breakers are only used for making and breaking the circuit to protect the machinery. Insofar as electrical wires and cables are concerned, he submits that adequate points have been made in the grounds of appeal. He, therefore, prays that the appeals may be allowed.
5. We have heard the rival submissions. We note that insofar as wires and cables are concerned, the case is fully covered by the decision of the Larger Bench of this Tribunal in the case of Jawahar Mills cited above. We note that vacuum circuit breakers are self-contained items; they are used for protection of electrical machinery. Electrical machinery installed in the factory for running the machines is essential for producing and processing of the goods i.e. the final product. By implication, we find that vacuum circuit breakers are capital goods as held by the Larger Bench of this Tribunal. We also note that all the points taken in the grounds of appeal by Revenue were dealt with specifically by the Larger Bench of this Tribunal in the case cited above. We, therefore, hold that electrical wires and cables and vacuum circuit breakers are capital goods and are eligible for Modvat credit under Rule 57Q. In this view of the matter, the impugned orders are upheld and the appeals are rejected.