Customs, Excise and Gold Tribunal - Bangalore
Zuari Cements vs Commr. Of C. Ex. on 27 December, 2002
Equivalent citations: 2002ECR629(TRI.-BANGALORE), 2003(159)ELT876(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. When these issues were called, nobody appeared for the appellants. There was a request for adjournment. Since the issue is on eligibility of Modvat credit, the appeals are taken up by rejecting the request for adjournment and after hearing ld. DR for the Revenue. It is found in Appeal No. E/146/02, the issue involved is regarding admissibility of Modvat credit on Nalcool (2000) falling under Chapter heading 3824.90 and Unprocessed Polyester Polyside Fabric falling under Chapter 5911.10 as capital goods under Rule 57Q.
(a) The goods Nalcool are admittedly used for treatment of water for de-mineralising the water tank to maintain physical hardness values of the water used in DG sets for cooling the engines. In respect of Unprocessed Polyester Polyside Fabric cloth, the use was in air slides to transport cement from cement mill to bucket elevator and for silos feeding by fluidizing the cement. Since the use of Nalcool is in de-mineralising of water which is used to maintain the engine in the DG set and not for use in the production of cement, the use of this chemical in de-mineralising water which is used for maintaining the DG sets would be a use only in maintenance and use in maintenance of capital goods is not an eligible input under Rule 57Q. The order of the lower authorities cannot be found fault with.
(b) As regards use of the fabric, the same is an admitted industrial use of the same and without the help of these air slides and shutes to transport cement from the mills to bucket elevator and silos for fluidizing the same cannot be achieved. The use is therefore a use as capital goods parts/ components and therefore would be found as an eligible capital goods components/parts. The order denying credit on the fabric is therefore set aside.
2. As regards Appeal No. E/147/2002, the issue is whether the spares/components of the capital goods mentioned at Sl. No. 1-4 of Item No. 5 of the Table under Rule 57Q are eligible for Modvat credit. The items are as follows : -
(i) Felt Seal (5911.10) (ii) Pressed Wool Felt (5602.21) (iii) Rubber Seal Ring (4016.00) (iv) SMC Sheet Ele. Grade (3920.31) (v) Nitobond, Base, Hardener (3823.00) (vi) Nalcool-2000 (3823.00) (vii) Shalplast - P Liner (3926.90)
(b) In view of the findings, as regards the above listed items, I have found that 'Nalcool' (2000) is not eligible capital goods, spares and components for capital goods credit. Since the same is admittedly used for treating the water used in 'maintenance' of the DG engine sets and not in or in relation to production of the goods. The other items have been denied credit only because a finding is arrived at that they fall under Chapter 59, 56, 40, 39, 38 and are therefore not eligible. The Commissioner (Appeals) appears to have been gone through the technical write-up furnished but has not recorded any findings why that technical write-up does not qualify the use of these items as capital goods. In view of this matter, the order of the Commissioner coming to a conclusion that the items have their own individual identity and are general purpose items capable for multifarious uses to deny Modvat credit cannot be upheld. The Modvat credit is therefore, found to be eligible since these chemicals as per their uses shown in the ground taken are essential parts of the cement mill capital goods.
(i) Felt Seal:
Felt Seal is used in Raw Mill inlet seal to avoid false air leakage into the system. This is essential in the process of manufacture of raw mill and in turn cement. It is a spare part of Raw Mill.
(ii) Pressed Wool Felt:
This material is used in the packing plant to avoid spillage on belt conveyors while packing cement. This is a part of Conveyor.
(iii) Rubber Seal Ring :
Rubber seal ring is used in Packer feed value seating in Packing Plant to extract required quantity of cement from feed hopper while packing cement. It is a spare part of packer.
(iv) SMC Sheet Electrical Grade :
This sheet is used in the Pre-heater fan motor of liquid rotor control. This is used as phase barrier separator in insulation work. This is required to prevent from electrical shocks. It is an accessory of motor.
(v) NITO Band, Base, Hardener:
This material is used at the time of base framework. This is used for grouting of the machinery base frame. This is necessary for avoiding vibration and to have rigidity for efficient operation of the machinery.
(vi) Shal Plast - Polymer Liner :
These Polymer liners are used in the fine coal hopper to avoid material accumulation and easy flow of fine coal. It is an accessory of the Coal Mill.
Therefore, I find that Modvat credit on items in this appeal other than Nalcool would be available.
3. These two appeals are disposed in terms of the findings arrived herein above.