Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs M.M. Forgings Ltd. on 15 April, 1997
Equivalent citations: 1998(100)ELT437(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. This reference application is filed by the Department to refer the following questions of law to the Hon'ble High Court:
(1) Explanation (1)(a) to Rule 57Q of Central Excise Rules, 1944 defined capital goods as "Machines, Machinery, Plant, Equipment, Apparatus, Tools or Appliances used for producing or processing of any goods or bringing about any change in any substance for the manufacture of final products". When the main provisions allowed credit of duty paid only on certain category of goods, is the order of the Hon'ble Tribunal correct, in extending the scope or capital goods credit by relying upon provisions of Rule 57S of Central Excise Rules, 1944.
(2) The present orders of the Hon'ble Tribunal is contrary to the decision of the Tribunal in the case of CCE, Coimbatore v. Velathal Spinning Mills (P) Ltd., Erode - Order No. 646/96, dated 16-4-1996 wherein the Hon'ble Tribunal categorically held that Rule 57S only provides for the manner of utilisation of capital goods and the credit allowed in respect of the duty paid thereon. It does not in any way enlarge the scope of the definition capital goods for Modvat purposes.
2. The learned SDR Shri Victor Thyagaraj in the first instance pointed out that there is a decision of the learned Single Member of the Tribunal in Order No. 646/96, dated 16-4-1996. He also pointed out that in the facts and circumstances of the case the respondents are not entitled to the benefit of Modvat credit with respect to the Fork Lifts which have been used by them. In this connection he pointed out that the Tribunal has not considered the fact that Rule 57S deals only with the manner of utilisation of capital goods credit and does not lay down the criteria for determining the eligibility to credit. He pointed out that it is only under Rule 57Q which is the main provision which states the category of goods that are eligible for capital goods credit. In that view of the matter he pointed out that there is a point of law which has arisen out of the order of the Tribunal.
3. The learned Consultant Shri Vijayaraghavan on the other hand pointed out that this order passed by the Tribunal actually is in the nature of remand order wherein the Tribunal stated that the appellants would be entitled to the benefit of Modvat credit in case they are able to show that the use of Fork Lifts is essential in the respondents; factory and without the use of the same the respondents would not be able to manufacture the final product. In this connection he pointed out that this observation of the Tribunal was based on the decision to the Hon'ble Supreme Court in the case of Collector of Central Excise v. Rajasthan State Chemical Works reported in 1991 (55) E.L.T. 444. He has also pointed out that the Department in the reference application has not given any reasoning as to how the decision of the Hon'ble Supreme Court is not applicable to the facts of this case. He therefore pointed out that when the Tribunal had passed its decision following the decision of the Hon'ble Supreme Court the question of referring that matter to the High Court does not arise in view of the fact that the matter is concluded by the decision of the Hon'ble Supreme Court.
4. We have considered the submissions of both the sides. The short point which involved in this particular case was with respect to the grant of Modvat credit in terms of Rule 57Q read with Rule 57S in respect of Lift Forks which were used by the respondents. In the above cited Supreme Court case their Lordships had considered the scope of lifting processes in the factory of the assessee. In that case the Hon'ble Supreme Court held that handling would also be a process in the context of the notified finished products in case it could be shown that without the function of handling the final product could not be manufactured. In the light of the above principles laid down by the Hon'ble Supreme Court we held in the case that if the appellants could show that the use of Fork Lifts is essential in their factory, without which they will not be able to manufacture the final product, then they are entitled to the benefit of Modvat credit. The observations with respect to Rule 57Q and 57S were made by us only in the context and that if so when our decision is clearly covered by the decision of the Hon'ble Supreme Court cited supra, we are of the view that no question of law has arisen which is required to be referred to the Hon'ble High Court. Accordingly the reference application is dismissed.