Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Shree Cement Ltd. on 16 July, 1999
Equivalent citations: 2000(117)ELT167(TRI-DEL)
ORDER J.N. Srinivasa Murthy, Member (J)
1. These two appeals are preferred by the Department against the Order-in-Appeal No. 190-CE/JPR/AJ/98, dated 31-3-1998 praying for, setting aside the same, to the extent of allowing Modvat credit on Dust Collection bags and filter bags, and Order-in-Original No. 41/97/97, dated 9-6-1997 of Asstt. Commissioner, Ajmer may be restored (in E-1280/98) and against the Order-in-Appeal No. 57(SSR) CE/JPR/97, dated 17-12-1997 to the extent of allowing Modvat credit on (1) Collecting electro-electrodes plates for ESP (2) Gas Analyser (3) Pressure Gauge (4) IT Transformer (5) Liquid Rotor (6) Vaccum Controller and (7) Relay for control panel, and Order-in-Original No. 105/95-MOD, dated 30-6-1995 of Assistant Commissioner to be restored (E/1281/98), period involved is March, 1996 to July 1997 (E/1280/98) and 1994 (E/1281/98).
1. The common facts of the case in brief are that the Respondent manufactures cement falling under Chapter sub-heading No. 7502.99 of the schedule to the Central Excise Tariff Act, 1985. During March, 1996, to July, 1996, the appellant availed Modvat credit wrongly on various goods (inputs) shown in the Annexure to show cause notice at Items 1 to 41, to the tune of Rs. 9,32,028.60 treating them as capital goods, which are not covered under Rule 57Q of Central Excise Rules. On issue of show cause notice for its recovery and imposing penalty the respondent replied it in detail. In the personal hearing submitted both oral and written submissions through the authorised representative. On considering them, Assistant Commissioner, Central Excise, Division passed Order-in-Original No. 41/97 as 9-6-1997, allowed Modvat credit amount of Rs. 3,76,042.95, including Rs. 98,582.65 on dust collection bags and filter bag, and disallowed for Rs. 5,55,985.65 and imposed penalty of Rs. 10,000/- under Rule 173Q, and sought for recovery. On appeal by the Respondent, Commissioner (Appeals) allowed Modvat credit on dust Collection bag and filter bag holding that they were integrally connected with the machine/machinery for producing cement and reduced the penalty to Rs. 25,000/- (E/1280/98). Hence the appeal by Department.
2. In E/1281/98 Respondent has wrongly availed Modvat Credit on collecting Electrode plates for ESP, Gas analyser pressure gauge, IT Transforms, liquid rotor, Vaccum Contractor and for relay controller panel treating them as capital goods under Rule 57 Q(1) of Central Excise Rules. After issue of show cause notice to respondent demanding recovery and for imposition of penalty, and receipt of reply by it, and holding personal hearing, and hearing respondent through authorised representative, and after considering the available material on record Assistant Collector, Ajmer passed Order-in-Original No. 105/95-MOD dated 30-6-1995, and disallowed Modvat amount of Rs. 60,582 under Rule 57U of Central Excise Rules. On appeal by respondent to the Commissioner (Appeals), it was allowed. Hence the appeals.
3. Perused the orders of lower authorities Appeal Memorandum; Heard both sides. They have only relied on Four Decisions of the Tribunal in 1999 (108) E.L.T. 47 - Jawahar Mills Ltd. v. C.C.E., Coimbatore,; 1997 (96) E.L.T. 354 - Grasim Cements v. C.C.E., Raipur - 1997(95) E.L.T. 655 - Century Mills Ltd. v. C.C.E., Raipur; 1997 (23) RLT 306 (T) - Mahar Cement, Raipur, and submitted that they cover all the goods involved in these cases. Perused the above rulings and also Rule 57Q of Central Excise Rules at the relevant period, and also the discussion and findings in the orders of lower authorities, and its background as narrated therein. The fact of these two appeals are considered in the light of the decisions cited as mentioned above, and discussed in the below paras.
4. In E/1280/98, the appeal confirms only to allowing of Modvat credit as Dust Collector bag/filter bag. In 1997 (95) E.L.T. 655 in the case of Century Cements v. CCE., Raipur. Tribunal, relying as 1996 (86) E.L.T. 177 (S.C.) in the case of IFFCO v. Collector, has allowed Modvat credit on the above inputs holding that they are being used to collect dust for prevention of Air pollution, to be treated as a part and parcel of manufacturing process of cement, and they are capital goods under Rule 57Q of Central Excise Rules. In view of this position, appeal of the department cannot be allowed.
5. In 281/98, the appeal confines only 7 inputs viz. Collecting electrode plates for ESF, Gas analyser, Pressure Gauge, IT Transformer, Vaccum Controller, liquid rotor, relay for control panel. 1997 (96) E.L.T. 354 in the case of Grasim Cement v. C.C.E., Raipur, Tribunal has rejected Modvat credit on the ground precise function of liquid rotor is not explained by the party. Modvat credit is allowed for Gas Analyser being used essentially in process of manufacture of cement at various stages as capital goods. In 1997 (23) RLT 306 in the case of Mahar Cement v. C.C.E .,Raipur Tribunal has allowed Modvat credit on pressure gauge, pressure measuring instrument as measuring equipment as capital goods. In 1999 (108) E.L.T. 47 in the case of Jawahar Mills Ltd. v. C.C.E., Coimbatore, Control panel is held to be a capital goods. So Modvat credit is available on relay for control panels.
6. In the impugned order, case of Grasim Cements in 1997 (96) E.L.T. 354 is ruled as to treat Collecting Electrodes plates for ESP as a pollution control equipment. As per grounds of appeal it is not used in manufacturing process. The reasoning of the Collector in para 2 is appropriate and proper. It is not controverted by any case law. So also regarding IT Transformer, Vaccum Contracter, under para 4 in page 4 and 5 of order. For IT Transformer, Vaccum contracter, in the grounds of appeal, 1997 (25) RLT 868 is relied on to contend that they are electrical items. They were used in Transmission and stepping down of the electricity, and not capital goods. The impugned order has relied on later case laws, which prevail. So subsequent case laws are not shown. In the absence of it, finding of the Commissioner (Appeals) holds good. In view of the above discussion, the appeal has to be allowed only for liquid Rotor only, Order-in-Original in page 9 at Item No. (viii), even on the admission of respondent, Modvat credit was denied as it is used for starting and giving high force during starting with low current to machine/motor, which is not a process of manufacture. In view of the above discussion and conclusions I pass the following order.
ORDER
7. For the reasons discussed above, the Appeal No. E/1281/98 is allowed only regarding the Modvat credit on the input liquid rotor, and the impugned order is modified to that extent, and it is confirmed for the rest. E/1280/98 is rejected.