Customs, Excise and Gold Tribunal - Mumbai
Bell Granito Ceramica Ltd. vs Commr. Of C. Ex. And Cus. on 3 January, 1997
Equivalent citations: 1997ECR694(TRI.-MUMBAI), 1999(105)ELT487(TRI-MUMBAI)
ORDER K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 5-8-1996 passed by the Commissioner, Central Excise and Customs, Vadodara by which the Commissioner has denied capital goods Modvat credit claimed by the appellants herein in their plant for manufacturing granite tiles. The demand confirmed is Rs. 6,42,182/- under Rule 57U. The appellants had claimed capital goods Modvat credit on material which have been broadly categorised by the Commissioner as (1) Oil Circuit Breakers (Switch Gears), (2) L.T. Distribution Panels/Control Panels, (3) Power Transformers and (4) Air Compressors.
2. The defence of the appellant say that all these items are part of their plant for Granite tiles and as such would be covered by the definition of Capital Goods under Rule 57Q and explanation thereto in terms of Explanation 1(b) which covers component parts, accessories and plant and equipment and machinery to be considered as capital goods for the purpose of Modvat credit. The Commissioner, Central Excise however, did not accept the defence and observed that these materials are not actually used for producing or processing the final product. Therefore, it held that they have not fulfilled the requirements. However, the Commissioner found that the items were specifically covered subsequent amendment to the Notification No. 11/95, dated 16-3-1995 but they will not be covered for the period prior to the amendment.
3. Shri J.C. Patel, ld. Counsel for the appellant submitted that the matter is covered by the Tribunal decisions in their favour. The items of electric panels and transformers as being eligible for capital goods Modvat credit is covered by the decision of Tribunal in the case of Commissioner of Customs and Excise, Meerut v. Nav Bharat Paper Mills - 1996 (86) E.L.T. 501 holding that electrical transformers and electric panel boards are capital goods as per definition of terms under Rule 57Q. The same decision also over-ruled the objection by the department that when these items included only by the amendment of the rule dated 16-3-1995, prior to the date, this cannot be extended the facility of Modvat credit. The ld. Counsel relied upon another decision of the Tribunal in the case of Modi Alkalies v. Commissioner of Central Excise -1996 (88) E.L.T. 555 wherein the Tribunal observed that switches in a panel board installed in a chemical plant would be covered by the explanation to Rule 57Q Clause 1(b) and that in considering their eligibility, the authority was in error in looking the definition of Capital Goods in the Explanation 1(a) which related to only main machinery, plant and etc. Shri. S.V. Singh, ld. DR contended that the items especially transformers and air compressors were not at all included in the definition of term 'Capital Goods' under Rule 57Q and the Commissioner was right in his conclusion that Modvat credit can be extended to these items only and from the date which they were included in the definition capital goods from 16-3-1995.
4. We have carefully considered the submissions made in both the sides. So far as the items are concerned, we find that in the case of electrical transformers and panels, Tribunal's decision in the case of Nav Bharat Paper Mills, squarely apply, as regards their eligibility under the definition of capital goods, and also with reference to retrospective applicability of the inclusion. Further all the four categories of these materials would fall within the Clause 1(b) to the Explanation defining the meaning of Capital Goods under Rule 57Q which reads as Capital Goods means - components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose. The earlier Para 1(a) says Capital Goods means - machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. The decision of the Tribunal relied upon by the appellant in the case of Modi Alkalies & Chemicals Ltd. supra has laid down the principles that in respect of such material which form component parts of a plant Explanation 1(b) of the above said explanation will come into play and being such component parts they will have to be held eligible for capital goods Modvat Credit. Applying the ratio of the above decision, the materials in question are such component parts because as has been explained above, the transformers regulate power supply to the plant and machinery.
5. Air Compressor provides the air pressure to the Kiln and the electrical panels transformers, have the function of correcting power factor supply to the various machinery in the plant to keep them at the desired level. Therefore, definition under Clause 1(b) gets attracted. In that view of the matter, these are to be considered as capital goods in the light of the definition of term under Rule 57Q as interpreted in the said decisions of Tribunal. The appeal is accordingly allowed.