Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Gangeshwar Limited on 23 August, 1999
Equivalent citations: 2000ECR618(TRI.-DELHI), 2000(115)ELT653(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. Revenue has filed two appeals against allowance of Modvat credit on boiler material, pipe fittings and pipes, turbines and cables.
2. Arguing the appeals Shri Satnam Singh, ld. DR submits that in so far as allowance of Modvat credit on boiler material is concerned; the same is not governed by the provision of Rule 57Q. He submits that boiler may be a machine and may under specific circumstances qualify for consideration of Modvat credit under Rule 57Q but the raw materials for manufacture of boiler can not be construed as machines or parts and equipment of machines. He, therefore, submits that the Commissioner (Appeals) has erred in allowing Modvat credit on boiler material.
3. Regarding pipe fittings and pipes ld. DR submits that there is no nexus between the machines and pipe fittings and pipes, Modvat credit as capital goods is available only on machines, plants etc. Pipe fittings and pipes cannot be termed as machines and plants etc. About turbine ld. DR submits that turbine in no way helps in production, processing or bringing about any change in the finished product and as these are the essential requirements or consideration of eligibility to Modvat credit as capital goods no Modvat credit on turbine is admissible so also he submitted about the cables.
4. Shri Rajesh Chibber, ld. Counsel appearing for the respondent submits that insofar as admissibility of Modvat credit on inputs used in the manufacture of boiler which has been termed as boiler material, is concerned the same is covered by the decision of this Tribunal in the case of CCE, Meerut v. Star Paper Ltd. reported in 1999 (111) E.L.T. 637. He submits that in this case the Tribunal held that even though welding electrodes cannot be said to have been used directly in manufacture of the final product i.e. paper but by virtue of Rule 57D(2) the inputs become admissible to Modvat credit. Modvat credit would be admissible in respect of inputs used in the manufacture of capital goods used within the factory for the manufacture of final product. Rule 57D(2) appears to put the use of inputs whether in the manufacture of intermediate goods or in the manufacture of capital goods on equal footing. If such capital goods or intermediate goods are further used in manufacture of final product, inputs are considered to have been used in or in relation to manufacture of final products. Ld. Counsel submits that boiler is a machine. Boiler is used for production of steam which is supplied to the plant for generation of electricity. He submits that since boiler is capital goods and the materials are inputs. In terms of Rule 57D(2), the inputs become entitled to Modvat credit of capital goods. He, therefore, submits that in terms of this judgment of the Tribunal the respondents were entitled to Modvat credit on the inputs which went into the manufacture of boiler. He, therefore, submits that the ld. Commissioner (Appeals) had rightly held so.
On pipe fittings and pipes ld. Counsel submits that the Tribunal had consistently been holding that pipe fittings and pipes which are used in the process of manufacture of the final product become eligible for Modvat credit. He submits that in the instant case pipes and pipe fittings are used for conveying steam from the boiler to the turbine. Turbine is used for production of electricity. Electricity in its turn is used for running the plant and machine installed for manufacture of VP Sugar. He submits that since pipes and pipe fittings are used in the process of manufacture, therefore, they satisfied the requirement of Rule 57Q as used in the process of manufacture of the final product. He submitted that turbines are used for generation of electricity. Electricity in its turn is used for moving the plant and machinery to function as such. He submits that turbine is thus the machine used in production of the final product. In so far as cables and wires are concerned, ld. Counsel submits that the same is covered by the decision of the Larger Bench of this Tribunal in the case of Jawahar Mills Ltd. reported in 1999 (108) E.L.T. 47. Concluding his submission, ld. Advocate submitted that the goods as indicated above, are eligible for the benefit of Modvat which was correctly allowed by the ld. Commissioner (Appeals) and therefore, prays that the appeals may be rejected.
5. On careful consideration of the submissions made by both sides, we find that insofar as boiler material is concerned, the same is covered by the decision of this Tribunal cited above. Following the ratio of that decision under Rule 57D(2), we hold that Modvat credit will be admissible on boiler material.
Insofar as pipe fittings and pipes are concerned, we find that there are a number of Tribunal's decisions in which it has been held that the pipes are used for conveying the material which is used in the process of manufacture then they are capital goods. In the instant case pipes and pipe fittings are used for conveying the steam which is in turn used for moving the turbine for generation of electricity and therefore, pipes and pipe fittings will be entitled to Modvat credit.
On turbines we note that turbines are used for generation of electricity and since electricity is used for running the plant and machinery for manufacture of VP Sugar, therefore, turbine is a machine and will be eligible for Modvat credit inasmuch as it is used for production of the final product.
Insofar as cables are concerned, we follow the ruling of the Larger Bench of this Tribunal and hold that Modvat credit will be admissible on cables as capital goods under Rule 57Q of the Central Excise Rules.
6. The two appeals are disposed of in the above terms.