Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Rajapalayam Mills Ltd. on 7 March, 2005
ORDER P.G. Chacko, Member (J)
1. This appeal filed by the Revenue is against an order passed by the Commissioner (Appeals) allowing capital goods credit to the respondents in respect of carding machine and drawing frame for the period prior to 21.10.1994. The original authority had also allowed the credit to the assessee.
2. The ground raised by the Revenue in this appeal for disallowing capital goods credit on the aforesaid machines to the respondents is that capital goods falling under Heading 52.02 of the CETA Schedule were specified as an eligible item under Rule 57Q only with effect from 21.10.1994 and therefore such goods received in the respondent's factory prior to the said date were not eligible for credit under the said Rule. Ld. SDR has reiterated this ground. On the other hand, Id. Counsel for the respondents has submitted that the question whether Modvat credit was admissible to such capital goods prior to 21.10.1994 has already been settled by this Tribunal, against the Revenue Ld. Counsel has cited the decision of this Bench in CCE v. Sudarsanam Spinning Mills Ltd. 2004 (113) ECR 237 (Tri. Chennai).
3. After considering the submissions, we find that the issue arising in this case is, no more, res integra. It has been consistently held by this Tribunal that, where the final product viz. Cotton yarn was chargeable to duty, the fact that any intermediate product emerged during the course of manufacture of the final product was no reason for denying to the manufacturer the benefit of Modvat credit under Rule 57Q on the capital goods used for the process of manufacture. It has been so held with reference to Rule 57R(2) as well as the Tribunal's Larger Bench decision in Ballarpur Industries Ltd. v. CCE . In the case of Sudarsanam Spinning Mills (supra), it has been specifically held that Modvat credit on capital goods used in textile mills in the manufacture of dutiable final product was not to be denied to the manufacturer on the ground that intermediate product such as combed/carded cotton, also known as sliver, which was exempt from duty, emerged during the process of manufacture of the final product. This decision was in relation to the period prior to 21.10.1994 as in the instant case. Thus, we note, the issue arising in this case stands covered in favour of the assessee. Therefore the appeal of the Revenue is rejected.
(Operative portion of the order was pronounced in open Court on 1.3.2005)