Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Indian Shaving Products Ltd. on 1 October, 1999
Equivalent citations: 2000(116)ELT88(TRI-DEL)
ORDER P.G Chacko, Member (J)
1. Both these appeals have arisen from the same order passed by the Commissioner of Central Excise (Appeals). Hence, I am proceeding to dispose of the two appeals by a common order.
2. The brief facts of the case are as follows :-
The appellants in Appeal No. E/953/98-NB are engaged in the manufacture of articles falling under Chapters 39 and 82 of the Central Excise Tariff Act, 1985 and are availing the facility of Modvat credit on capital goods under Rule 57Q of the Central Excise Rules, 1944. They took credit of an amount of duty of Rs. 19,933/- paid on certain goods (which they claimed as capital goods falling under Rule 57Q of the Rules ibid) on 31-7-1995. These goods are mentioned below :-
(i) Capacitors
(ii) Power Transistor & Diodes
(iii) Voltage Selector, Output Sockets, Supply Plug, Thermal Overload, On/Off switch The jurisdictional Assistant Commissioner of Central Excise, by a show-cause notice, directed the party to show cause why the Modvat credit of the aforesaid amount taken on the aforementioned goods should not be disallowed and recovered under Rule 57U of the Rules ibid. The party resisted the proposal to disallow the Modvat credit by explaining the functions of the aforesaid goods and pleading that all the goods were modvatable. The Assistant Commissioner adjudicated the matter and, by his Order-in-Original, dis-allowed the entire Modvat credit of Rs. 19,933/- and ordered recovery thereof from the party under Rule 57U of the Rules ibid. In the appeal filed by the assessee against this order, the Commissioner (Appeals) passed the impugned order allowing Modvat credit on capacitors and disallowing such credit on the rest of the goods. The Appeal No. E/757/98-NB filed by the Revenue is against the lower appellate authority's order allowing Modvat credit on capacitors, while the appeal filed by the assessee is against the lower appellate authority's order denying Modvat credit on the rest of the goods aforementioned.
3. I have heard the learned JDR, Shri Y.R. Kilania for the Revenue and the learned Advocate, Shri Harbans Singh for the assessee. I have also carefully examined the records of the case.
4. The learned JDR has reiterated the grounds of appeal No. E/757/98-NB and submitted that since the capacitors are used only to step up electric power and do not have any nexus with actual process of production they do not fall under the category of capital goods under Rule 57Q. The learned JDR has relied, as the lower appellate authority did, on the decision of the Tribunal in the case of Commissioner of Central Excise v. Shanmungraja Spinning Mills (P) Limited [1997 (89) E.L.T. 84 (Tribunal)]. On the other hand, the learned Advocate for the assessee has submitted that capacitors have been held to be eligible for Modvat credit by the Tribunal in a number of cases. He has cited the decision of the Tribunal in the following cases :-
(i) Grasim Cement v. C.C.E., 1997 (96) E.L.T. 354
(ii) Century Cements Limited v. C.C.E., 1998 (24) RLT 75 (CEGAT)
(iii) India Glycols Limited v. C.C.E., Meerut 1998 (25) RLT 496 (CEGAT) I observe that in all the aforecited decisions, capacitors were held to be eligible for Modvat credit under Rule 57Q of the Rules ibid. The learned Advocate has further invited my attention to Para 31 of the decision of the Tribunal's Larger Bench in the case of Jawahar Mills v. C.C.E., Coimbatore [1999 (108) E.L.T. 47 (Tribunal)] wherein the Larger Bench observed to the effect that the decision of the Tribunal in the case of C.C.E. v. Shanmungraja Spinning Mills (P) Limited (vide supra) was not good law insofar as the Hon'ble Supreme Court's rulings in the cases of J.K. Cotton Spinning & Weaving Mills Company Limited and Indian Copper Corporation on the relevant point had not been brought to the notice of the Bench while dealing with the case of Shanmungraja Spinning Mills (P) Limited. These submissions of the learned Advocate, according to me, must be accepted and support must be drawn from the ratio of the Tribunal's Larger Bench decision in the case of Jawahar Mills in support of the learned Advocate's submission that capacitors are capital goods under Rule 57Q ibid for the purposes of availment of Modvat credit. Hence, the Revenue's appeal is liable to be dismissed and I do accordingly.
5. In the assessee's appeal, the learned Advocate has brought to my notice the fact that all the goods in respect of which Modvat credit was denied by the lower authorities would come within the category of electrical machinery and spares which have been held to be capital goods under Rule 57Q ibid in a good number of cases by the Tribunal. The learned Advocate has further submitted that the said goods have also been covered by the decision of the Tribunal in the case of Jawahar Mills (supra). Having perused the decision cited before me, I have found that all the goods involved in the dispute are electrical items and that such items have been held to be falling in the category of capital goods under Rule 57Q, by the decision in the case of Jawahar Mills. Therefore, following the ratio of the decision in the case of Jawahar Mills, I hold that all the goods involved in the appeal filed by the assessee would come within the ambit of Explanation I to Rule 57Q of the Rules ibid and hence eligible as capital goods for the Modvat facility under the said Rule. Accordingly, I allow this appeal, with consequential relief to the appellants/assessee.