Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Sri Vignesh Yarns (P) Ltd. on 13 November, 1998
Equivalent citations: 1999ECR429(TRI.-CHENNAI), 1999(105)ELT655(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. These two Revenue appeals have similar issues and were therefore together on learned Consultant's request and ld. DR's no objection and are being considered through this common order.
2. Heard ld. Consultant, Shri S. Kandasamy for appellants and Shri S. Kannan, ld. JDR.
3. Ld. Consultant submits that the issues concerned are eligibility of Modvat Credit under Capital goods scheme for Diesel Generating sets and Comber for cotton yarn.
4. Ld. JDR submits on Revenue's Appeal No. E/1777/96 against Order-in-Appeal No. 630/96-C.E. (CBE), dated 23-9-1996 passed by Commissioner (Appeals) as follows :-
(a) both Diesel Generating set and Comber have been used for manufacture of cotton carded/combed, which is an intermediate product chargeable to NIL duty.
(b) The impugned order that credit on comber be allowed after 21-10-1994 after excluding 2.5% of duty per each quarter of use up to 21-10-1994 is incorrect and not legal as Rule 57S does not extend credit.
(c) He cites case of Velathal Spinning Mills (?) Ltd. (Final Order No. 646/96 dated 16-4-1996) that Rule 57S cannot override the provisions of Rule 57Q.
(d) Notification No. 60/94-C.E. (N.T.), dated 21-10-1994 allows credit on preparatory stage machines like comber and is effective from that date. But comber was received on 3-7-1994.
(e) Department has appealed to CEGAT in case of Gobald Textiles whose order-in-appeal is relied upon in this impugned order.
5. Learned JDR further submitted that the appeal of Gobald Textiles is therefore also under consideration today. He further submits that a similar issue was considered by Final Order No. 1715/98 dated 27-8-1998 by a Single Member Bench of this Tribunal, wherein the matter was remanded to the original authority to verify the marketability of carded/combed cotton and give copies of evidence to the manufacturer before deciding the issue de novo.
6. Ld. JDR also submitted that in the case of Singaravelar Spinning Mills (P) Ltd. Final Order No. 503/98 dated 25-2-1998 passed by another Single Member Bench of this Tribunal, a similar matter was remanded to first appellate authority for a speaking order on whether the date of receipt of the 'comber' or date of taking credit was the material date even after proclamation of Notification No. 60/94-C.E. (supra).
7. Ld. JDR prayed that if Revenue's appeal is not upheld on merits, then following the ratio of aforesaid decisions, matter may be remanded.
8. Ld. Consultant, Shri Kandasamy submitted as follows :-
(a) Carded/Combed cotton is not 'goods'. It is a silver for cotton and remains as cotton and no distinct product emerges. Such sliver is not marketable and not 'goods'.
(b) with respect to Notification No. 60/94-C.E., dated 21-10-1994, the date of receipt of machines (CG) is not material. Only the date of taking credit is material. There is no provision in Rule 57Q which, at that relevant time said that credit is to be taken within specified time of receipt of goods. Thus, as long as credit is taken after 21-10-1994, the said notification is satisfied. In their case credit was taken on 3-11-1994.
(c) Ld. Consultant cited the case of Hematic Motors as reported in 1997 (91) E.L.T. 592 (Tribunal) wherein it was held that all Rules under Modvat scheme are to be read together and not in a disjointed manner. Thus Rule 57S and Rule 57Q are to be read together as in impugned.
(d) Ld. Consultant also cited case of Marvel Vinyles as reported in 1997 (90) E.L.T. 361 (Tribunal) wherein it was held that Notification No. 11/95-C.E., dated 16-3-1995 ammending Rule 57Q include specified chapter heading of CETA, 1985 in its ambit was clarificatory and therefore has retrospective effect. The Notification No. 60/94 (supra) should also be treated accordingly.
9. With respect to Gobald Textiles (E/1146/96), ld. JDR submits that issue concerns 'comber' only and that credit was taken before 21-10-1995. He reiterates same submissions as far other appeal. Ld. Consultant also reiterates same arguments and above for this appeal and agrees that credit was taken prior to 21-10-1994.
10. I have carefully considered the arguments on both sides.
11. As far as the Diesel Generating set in Appeal No. E/1777/96 is concerned, I find that in Order-in-Original No. 455/95 dated 8-12-1995, Ld. Asst. Collector Central Excise has recorded a clear finding of fact that said Diesel Generating set was also used to generate electricity used, in turn, to spin yarns and hence had allowed the credit. The order impugned does not consider the question of Diesel Generating set at all, and only discusses the issue relating to 'comber'. I have also perused the prayer as well as grounds of appeal. The prayer is for restoration of order-in-original dated 8-12-1995 (supra) and there is no mention of any ground against Diesel Generating set. Therefore, I find that the question of Diesel Generating set is a non-issue in this appeal and no orders are required thereon.
12. As far as the comber for combed/coded cotton is concerned, I find that as against the single member decisions submitted by ld. JDR and the other case laws cited (on similar principles of law) by ld. Consultant, this very issue has been already considered by a two member Bench of this very Tribunal in the case of C.C.E. v. Singaravelar Spinning Mills (P) Ltd. and as reported in 1998 (28) RLT 872 (CEGAT). The issues considered therein were as follows :-
"(a) Whether cotton combed carded sliver is 'goods', being a new item which is marketable? and
(b) Whether Notification No. 60/94 NT dated 21-10-1994 can be applied with retrospective effect, being clarificatory in nature and
(c) Whether Rule 57Q is to be read with Rule 57S and hence impugned order-in-appeal giving 2.5% per quarter deductions is correct in law?"
It was held therein, inter alia, as follows :-
(i) Carded/combed cotton is "goods" falling under 52.02 and the machinery used for producing it is not eligible to Modvat credit under Rule 57Q up to 27-10-1994.
(ii) Notification No. 60/94, dated 21-10-1994 is not clarificatory and therefore not retrospective in nature; and
(iii) Therefore there is no need to go into the question of whether Rule 57Q is to be read with Rule 57S or not.
13. In view of these findings, the said order prescribed as follows :-
"In view of the aforesaid findings, we conclude that Modvat credit on carding machine and speed frame was not available up to 20-10-1994 under Rule 57Q read with Rule 57 R(2). Thus the impugned orders-in-appeal are liable to be set aside on these items."
14. I find that the issues involved and arguments rendered in the present case are exactly the same as in the decision in 1998 (28) RLT 872 (CEGAT) supra and therefore the ratio thereof is clearly applicable to this case as in both the cases the said machines were received prior to 21-10-1994. Applying the ratio thereof here, I find that the said impugned orders are liable to be set aside and the appeals of Revenue succeed. Ordered accordingly.