Customs, Excise and Gold Tribunal - Tamil Nadu
Addison And Co. Ltd. vs Cce on 21 November, 2003
Equivalent citations: 2004(113)ECR778(TRI.-CHENNAI), 2002(149)ELT1388(TRI-CHENNAI)
ORDER
Jeet Ram Kait Member (T)
1. This appeal has been filed by M/s Addisson & Co. Ltd., and is directed against Order in Appeal No. 229/92(M), dated 6.10.1992 by which the Learned Commissioner (Appeals) has rejected their claim for MODVAT credit on grinding wheels and coating/peeling compound.
2. Aggrieved by this order, the appellants have come in appeal on the ground hat the grinding wheel has been treated as a tool and part of the machinery by applying the ratio in the matter of Andaman Timbers Case, where the Department had denied MODVAT credit to ALOXIDE paper used by them holding the same as a tool under Rule 57A. Since tools are excluded from the category of inputs, the ruling in the Andaman Timber Case is very much relevant to the present case and the Learned Collector has erred in wrongly stating that this judgment is not relevant. As regards the grinding wheels, they are classified in Chapter 68 and as per this Chapter no tools are excluded from this chapter. Therefore, grinding wheels are not tools as per the Tariff, the appellants in their own case, have been allowed MODVAT credit on rust preventive oil and the compound being on the same footing which is applied on the tool itself. The order of the learned collector is not sustainable in law and has to be set aside by granting them consequential relief. Ld. Advocate relied on Tribunal judgment rendered in their own case , wherein, MODVAT credit was allowed to anti-rust and anti-corrosion oil applied to finished tools before putting the goods in the market stream because application of oil was incidental and ancillary to the manufacture of the product within the meaning of Rule 57A of the Central Excise Rules, 1944. The Learned Advocate also invited my attention to Para 30 of the judgment rendered by the Tribunal in the matter of Union Carbide India Ltd. v. CCE, Calcutta-I 1996 (66) ECR 172 (T) and the judgment rendered by the Tribunal in the case of Batliboi and Co. v. C.C. Baroda reported in 1988 (97) ELT 307 (T) : 1998 (74) ECR 251, wherein, it was held that MODVAT credit is available on grinding wheels as parts of grinding machine is used for smoothening the surface of the components manufactured, therefore, entitled for MODVAT under Rule 57A ibid.
3. The Learned DR Shri Mani reiterated the findings by the Learned Collector (Appeal).
4. Heard both sides, considered submissions made by both sides and I am in agreement with the order in appeal No. 229/92 as regards the denial of MODVAT credit on coating/peeling compound is concerned because the appellants themselves admitted that it is used selectively for export orders only. The Learned Collector (Appeal) in Para 5 of her order has also given categorical finding that from a visual examination of cutting tools coating with peeling compound she found that the point which looked like packing can be peeled off by hand as the very name suggests. She, therefore, differentiated the coating/peeling compound with anti-corrosion oil/rust preventive oil or silicon spray which were considered as eligible inputs by the Hon'ble Tribunal in the decision cited by the appellants in their own case reported in 1990 (48) ELT 219 (Tri). She had further held that rust preventive oil carries effects of lasting nature on the tools and silicon separate spray was found to be essential in the process of manufacture of final products, which is not the case here and the fact of applying the peeling compound on the cutting tools is temporary and this laminated packing can be peeled off by hand.
In view of the above facts and circumstances, MODVAT credit on peeling compound has been rightly denied.
5. As regards, the MODVAT credit on grinding wheels, the case is squarely covered by the judgments rendered by Tribunal in the case of Union Carbide of India Ltd. v. CCE, Calcutta-I, where the Tribunal by majority view has held in Para 30 that items of these nature are eligible inputs under Rule 57A of the rules ibid. As such, inputs are not excluded by virtue of exclusion Clause (i) of the explanation to the rule. The Tribunal in the case of Batliboi and Co. v. C.C. Baroda have reiterated in 1998 (97) ELT 309 (Tri) : 1998 (74) ECR 251 (T) by applying the judgment of the Tribunal in the case of Union Carbide India Ltd. v. CCE, Calcutta-I has held that grinding wheels/parts of grinding machine are used for smoothening of the surface of the components manufacture, hence they are eligible for availing MODVAT credit under Rule 57A of the rules ibid. In view of this settled legal position, the MODVAT credit on grinding wheels is eligible under Rule 57A of the rules ibid and the impugned order passed by the Learned Collector regarding denial of MODVAT credit on grinding wheels is not legal and proper and is set aside. With this modification, the appeal is partly allowed. Ordered accordingly.
(Dictated and pronounced in open Court).