Customs, Excise and Gold Tribunal - Delhi
H.E.G. Ltd. vs Commissioner Of Central Excise on 13 October, 2000
Equivalent citations: 2001(127)ELT235(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. This is an appeal against denial of Modvat credit under Rule 57 A and 57Q of the Central Excise Rules, 1944 and inputs received short on which Modvat credit was taken as indicated in the invoices for the full quantity.
2. The facts of the case are that the appellants are engaged in the manufacture of Graphite Electrodes and some other items. They are availing the benefit of taking credit of duty paid on inputs and duty paid on capital goods under the Modvat scheme. The appellants claimed Modvat credit on certain items which the Department alleged that they are not entitled to Modvat credit on the items. The Department also found that though in respect of certain items, the quantity received in the factory was less than the quantity shown in the invoices. The appellants had taken credit on the full quantity.
3. Arguing the case for the appellants Shri M.K. Sharma, ld. Counsel submits that most of the items on which Modvat credit has been denied are covered by one or the other decision of this Tribunal. He points out that Modvat credit has been denied on Therminol Oil and Transformer Oil. Ld. Counsel submits that these items have been held to be cooling material. Ld. Counsel, submits that cooling material has been held as eligible item by this Tribunal in the case of Sipta Coated Steel Ltd. v. CCE reported in 1998 (99) E.L.T. 553.
4. In regard to Clean Flow ld. Counsel submits that this item is covered by the decision of this Tribunal in the case of CCE v. J.K. Synthetics reported in 1998 (98) E.L.T. 507. Ld. Counsel submits that the third item on which Modvat credit was denied was Carbon Tetra Chloride. He submits that Carbon Tetra Chloride is used for removing the deposit from Cooling Coil and it is covered by the decision as in the case of Clean Flow cited above.
5. Regarding Engg. Rope Sling ld. Counsel submits that Rope Sling is used in the cranes which is a material handling equipment that this Tribunal in the case of Rathi Ispat Ltd. v. CCE reported in 2000 (116) E.L.T. 50 held that Steel Wire Rope is part of material handling equipment and is eligible under Rule 57Q. Ld. Counsel also submitted that Steel Wire Rope Slings are specifically covered as Modvatable item under Rule 57Q in the case of CCE v. Seshasayee Paper & Board Ltd. reported in 1997 (93) E.L.T. 75.
6. Regarding Asbestos Cloth/Super Ceramic Blanket, ld. Counsel submits that these items are Insulation material. He submits that Insulation material has been held to be a eligible item in the case of CCE v. Gujarat Ambitja Cement Ltd. reported in 2000 (115) E.L.T. 579. He submits that Ceramic Fibre Blankets are specifically covered by the decision of this Tribunal in the case of Daga Ceramics Pvt. Ltd. v. CCE reported in 2000 (117) E.L.T. 313.
7. On the High Vaccum Cryogenic Container of Aluminium ld. Counsel submits that there are chemicals which are used in the Laboratory in the Research & Development Wing. He submits that since chemicals are used for testing and testing equipment is covered by the decision of this Tribunal in the case of CCE v. Vindhya Telelinks Ltd. reported in 2000 (115) E.L.T. 534. Therefore Modvat credit is admissible on container of Aluminium.
8. On admissibility of Modvat credit on Dust Collection Bags ld. Counsel submits that these are items essential for checking air pollution. He submits that since it is a pollution control equipments it is specifically covered as Modvatable item by the decision of this item in the case of Ipitata Sponge Iron Ltd. v. CCE reported in 1998 (104) E.L.T. 339. Ld. Counsel submitted that they are using M.S. Steel, channels for manufacture of lifting equipment. He submits that Angles and M.S. Rounds are modvatable items as was held by this Tribunal in the case of CCE v. Steel Strips Ltd. reported in 2000 (116) E.L.T. 49.
9. On the question of shortage of furnace oil and LDO, ld. Counsel submits that the appellants received these items from M/s. Indian Oil Corpn.; that while transporting, the items being volatile loose in weight. He submits that this loss in weight was nominal. He submits that there was some difference in weight on account of different units used for measuring. He submits that at the time of despatch from the manufacturing units these items are measured in kilolitre whereas at the time of receipt in the factory of the appellants, they are weighted in m.t. He submits that there are a number of decisions of this Tribunal that nominal shortage may be overlooked while allowing Modvat credit. The ld. Counsel submits that Modvat credit even if admissible as an input and claimed as capital goods, it should be held to be Modvat credit admissible on inputs and vice versa. Ld. Counsel submits that it is a well settled position in law. Ld. Counsel, therefore, submits that in view of the above submissions and the decisions of this Tribunal, the appeal may be allowed.
10. Ld. DR Shri Mewa Singh submits that in so far as Cryogenic Container of Aluminium is concerned, this container is used only for containing chemicals which are used for testing, for quality etc. of the product. He, therefore, submits that this cannot be treated as a Modvatable item. Ld, DR submits that in so far as shortages are concerned, the explanation given by the appellants is not correct in-as-much as for comparing and calculation of the duty on shortage the items were converted into the same unit. He submits that nature of the goods already taken into consideration and therefore, the quantity short received will not be eligible for Modvat credit.
11. We have heard the rival submissions. We note that Therminol Oil and Transformer Oil, Clean Flow, Carbon Tetra cloride, Engg. Rope Sling, Asbestos Cloth/Super Ceramic Blanket and Dust Collection Bags are covered by one or the other decision of this Tribunal as indicated in the submissions made by the ld. Counsel for the appellant. We, therefore, held that Modvat credit either under Rule 57A or under Rule 57Q is admissible to the above mentioned items.
In so far as High Vaccum Cryogenic Container of Aluminium is concerned, we note that this aluminium container is used for keeping/storing the chemicals. The chemicals are used in a testing laboratory. Thus extending the benefit to the Aluminium container is not warranted. In the circumstances, Modvat credit will not be admissible on this item.
In so far as M.S. Angles, Channels, etc. are concerned, we note that they are already covered by one or the other decision of this Tribunal as indicated by the ld. Counsel. We, therefore, hold that Modvat credit will be admissible on these items.
In so far as shortage in furnace oil and LDO is concerned, we note that these items are transported in containers. No doubt the items are volatile in nature and were so considered by the adjudicating authority. We further note that the Counsel for the appellant pointed out certain decision of this Tribunal in which it was held that nominal loss on account of natural causes may be allowed. However, the facts in the present case are different. We, therefore, are not inclined to give any allowance for lose by natural causes in-as-much as on all petroleum products, volatile nature of the goods is taken into consideration while they are assessed to duty on it under the ASTM.
12. Therefore, having regard to these facts, we hold that excess credit taken on short quantity of LDO and furnace oil received will not be admissible to the appellants.
13. Levy of penalty under Section 11AC was also argued before us. Ld. Counsel submitted that there was no mis-statement or suppression of facts so as to attract penalty under Section 11AC. We find that this contention of the appellant is not supported by any evidence. In the instant case, the appellants nowhere indicated that the quantity of LDO and furnace oil received by them was less whereas they were taking Modvat credit on a higher quantity and therefore, there was suppression of facts. We, therefore, hold that penalty under Section 11AC is sustainable in law. Looking to the facts of the case, however, we find that the penalty is on the higher side, the same is, therefore, reduced to Rs. one lakh. Similarly, the penalty under Rule 173Q is reduced to Rs. 50,000/-. -
14. The appeal is allowed in the above terms.