Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Shanti Synthetics Ltd. on 16 December, 1996
Equivalent citations: 1998(97)ELT533(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. The respondents had taken Modvat credit in terms of Rule 57Q of Central Excise Rules to the extent of Rs. 12,395/- in respect of the specified duty paid on voltage stabilizers and voltage regulators claiming them to be capital goods. This was objected to by the department and show cause notice was issued which was adjudicated by the Assistant Collector of Central Excise, Udaipur. On appeal by them, the Commissioner of Central Excise (Appeals) set aside the order of the Assistant Collector, agreeing with their claim that these items are components of textile plant and machinery and that without the use of the stabilizer yarn cannot be produced. The present appeal challenges this finding.
2. There is no one present on behalf of the respondents when the appeal came up for hearing. No communication has also been received from them. The appeal is disposed of after hearing Shri Y.R. Kilania, learned DR.
3. The thrust of the submissions made by the learned DR is that the items in question are not the capital goods, contemplated under Rule 57Q as they are not used in any process for producing yarn. Such yarn is produced with the help of other equipment and machinery.
4. I have taken note of the submissions made on behalf of the department by Shri Kilania. I have also perused the record. I find that on the question of grant of Modvat credit for capital goods under Rule 57Q even as it stood at the material time, there are a number of decisions wherein it had been held that such benefit is admissible not only for such items of machines, machinery, apparatus, equipment etc. directly used in the production or processing of goods but also those items which even if not directly used in that manner find use in an auxiliary manner in the production process. Such items include transformers and electronic panel board, voltmeters and ammeters, chilled water coil and weighing machine etc. Such decisions have been reported in 1996 (86) E.L.T. 501 and 1996 (17) RLT 378. There is also a Final Order No. A/1244/96-NB, dated 23-4-1996 1996 (88) E.L.T. 530 (Tribunal). In respect of the last mentioned order of the Tribunal the concerned Commissioner had filed a reference application which was dismissed under Order No. Ref./92/96-NB, dated 13-11-1996 1997 (90) E.L.T. 214 (Tribunal). That order was passed taking into account the judgment of the Gujarat High Court in Industrial Machinery Manufacturers Pvt. Ltd. v. State of Gujarat reported in [1965] Vol. XVI Sales Tax Cases 380 wherein it was held that humidifiers are machinery used in the manufacture of cloth. Again in Tata Iron & Steel Company v. Union of India -1988 (33) E.L.T. 217 (Patna), the Patna High Court had held that cranes used for placement of heavy goods from one place to another in the factory were held to be not eligible for the benefit of Notification 118/75, dated 30-4-1975. Such a decision was taken by the" Court as the exemption Notification in question, namely 118/75, dated 30-4-1975 excluded from its scope machinery used in the factory in the manufacture of goods. In Avery India Limited v. The Commercial Tax Officer reported in [1983] Vol. 52 Sales Tax Cases 297. The Calcutta High Court had held that weighing and testing machines are integrally connected with the ultimate production but for that process manufacture or processing of goods would fall within the expression "in the manufacture of goods." In line with the approach taken in this catena of decisions, the decision taken by the Collector (Appeals) in extending the benefit of Rule 57Q to the items in question cannot be faulted and has to be upheld. I hold accordingly and dismiss the appeal.