Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Bhushan Steels And Strips Ltd. on 16 December, 1997
Equivalent citations: 1998(101)ELT422(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. This appeal is filed by the Revenue, assailing the order of the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) had held that the definition under the Rule 57G is vast enough to include all the items in the [field] of capital goods. Accordingly, he allowed the appeal of the Asses-see.
2. The facts leading to the present appeal are that the Respondents are engaged in the manufacture of CR Coils/CR Sheets, GP Coils/GP Sheets and Oxygen Gas. They filed declarations under Rule 57T of the Central Excise Rules and availed Modvat credit on a number of items holding that these items were capital goods for purposes of Rule 57Q. The Asstt. Collector disallowed Modvat credit on Grinding Wheel, Electric Motor, Gear pump, HRC fuse, Static Convertor, Heat Exchanger and Cable. The Collector (Appeals), however, allowed the Appeal of the Assessee filed before him and hence the appeal before us.
3. Shri A.M. Tilak, the ld. JDR appearing for the Appellant-Commissioner, submits that Modvat credit will not be admissible on Grinding Wheel inasmuch as a Grinding Wheel is used for grinding of mill rolls which are a part of machine required in manufacture of CR Sheets. It was submitted by the ld. JDR that Grinding Wheels are in fact used as tools in the workshop to repair the components and were, therefore, neither used for producing or processing of the final product or for bringing about a change in the substance in the final product.
4. The ld. DR submitted that Modvat credit as capital goods cannot be allowed on electric motors as these motors are used in submersible pump for supply of water to all the processing lines and, therefore, did not merit treatment as capital goods. Similar reasoning was advanced in respect of electric cables. The ld. DR also advanced similar arguments in respect of gear pump, HRC Fuse, Static Convertor and Heat Exchanger and submitted that the Asstt. Collector has rightly denied the benefit of Modvat credit to the respondents herein and prayed that the order of the Asstt. Collector may be restored.
5. Shri J.S. Agarwal, the ld. Advocate, along with Shri R. Chibber, the ld. Advocate, appeared for the Respondents and submitted that Grinding Wheel is an essential item for CRM production as Mill Rolls have to be grind every now and then and that without which CR Sheets cannot be produced. The ld. Counsel, therefore, submitted that it was a capital goods for purposes of explanation under Rule 57Q. On Electric Motors, the ld. Counsel submitted that this is a motor of submersible pump which supplies water to all the processing lines which is an integral part for providing primary force to the pumps to pump water. About gear pumps, the ld. Counsel submitted that this is a rotary screw gear pump and is used in hydraulic oil distribution system for various parts of the machine. About HRC fuse, it was argued that these are used in motor starters of all AC motors used in the plant; that motors are being protected from any mechanical overloading/short circuit with HRC fuses; that their failure immediately results in stoppage of production and consequent losses. About Heat Exchanger, the ld. Counsel submitted that these are used for cooling of lubricating oil, hydraulic oil and coolant used in the cold rolling mills for bringing down their temperature through continuous water circulation. On static convertor, the ld. Counsel submitted that this is a sort of transformer and is being used for the purpose of converting the AC supply into DC supply for battery charging, heat control and motor control. About the role of electric cable, the ld. Counsel submitted that electric cables are used for power as well as control circuits of drives and panels; that the process of rolling is accomplished by drive motors which are connected to panels or power source through cables only; that without these cables, the electric supply would be disrupted and the machines would come to a halt.
6. The ld. Counsel, summing up his arguments, submitted that in view of the location of the above mentioned items and their use in the plant and machinery, they are capital goods.
7. Heard the submissions of both sides. On careful consideration of the submissions, I have to first examine as to what is included as capital goods under Rule 57Q of the Central Excise Rules, 1944. I note that prior to 16-3-1995, under Rule 57Q, Modvat credit was permissible only on such capital goods which fall within the purview of Explanation l(a), l(b) and l(c). This stipulated that Modvat credit was admissible only on those machines, machinery, equipments etc. and parts thereof which were used for producing or processing of dutiable final products or which were used in bringing about any change in any substance in the manufacture of the final product. On an examination of the function of the items stated above, I find that they are either machines or parts of machinery which are, by their location and use, essentially capital goods, used either for producing or processing of the final product or for bringing about a change in the products which are finally used in the manufacture of the final product. Having regard to these findings, I uphold the order of the Commissioner (Appeals). In the result, the Appeal is rejected.