Customs, Excise and Gold Tribunal - Ahmedabad
C.C.E. vs Sterlite Industries (India) Ltd. on 12 October, 2006
Equivalent citations: 2007(114)ECC53, 2007ECR53(TRI.-AHMEDABAD)
ORDER
R.K. Abichandani, J. (President)
1. This appeal has been preferred by the Revenue against the order-in-appeal dated 22.9.1999, partly allowing the appeal and holding that modvat credit was eligible on pipes and fittings, cables, control panels, electric insulator, pumps and thereby confirming the eligibility of credit in respect of items other than LPG storage tank.
2. A show cause notice was issued on 11.10.1996 on the respondent - assessee proposing to disallow modvat credit on the capital goods to the tune of Rs. 62,86,987/- under Rule 57Q of the Central Excise Rules, 1944 read with Section 11A of the said rules. According to the Revenue, the assessee had received certain capital goods, namely, tanks, vessels, pipes and fittings, panels, cables, insulators, switch boards, pumps, electrodes under cover of valid duty paying documents and had availed modvat credit on capital goods during the period from May 1996 to July 1996. It was alleged in the show cause notice that modvat credit was not admissible because, these capital goods were not used for producing or processing the final product, manufactured in the said factory, nor were they parts, components or accessories of the machines and machineries, defined as capital goods at the relevant time.
3. The adjudicating authority held that the pipes and fittings were used to lead liquid at certain places, the cables were used to lead electric supply to the machineries, the pump was used to draw liquid from the bottom to upper stage, and like wise, all the goods were used for the purpose, different than the manufacturing process of the final product and that they were not used for bringing about any change in the substance of the materials. The credit on all these goods was, therefore, disallowed on the ground that they were neither machines and machineries, equipments, apparatus etc. nor parts thereof, as contemplated by the provisions of Rule 57Q of the rules.
4. The learned authorized representative for the department contended that these goods should not be treated as capital goods within the meaning of that expression as defined at the relevant time. The definition of capital goods was amended with effect from 23.7.1996, and, therefore, according to the leaned authorized representative, it could not cover the earlier period which was relevant for the purpose of adjudication. He also submitted that welding electrodes cannot be treated as capital goods on the authority of the decision of the Larger Bench in Triveni Engineering Industries Ltd. reported in 2005 (186) ELT 158 (LB). He has also relied upon other decision of the Larger Bench in Jaypee Rawa Plant reported in (159) ELT 553 (LB).
5. The learned Counsel for the respondent - assessee submitted that the controversy as regards control panels, cables, distribution boards, upper pipe etc. was no longer res integra and the issue was covered by the decision of the Larger Bench in Jawahar Mills Ltd. v. C.C.E., Coimbatore . He also relied upon the decisions reported in Andhra Sugars reported in 2006 (196) ELT 78, and Jindal Strips Ltd. reported in 2001 (137) ELT 1159, against which the appeal was summarily dismissed as .
6. After having heard both the sides and examining the material on record, it appears to us that except welding electrodes on which modvat credit cannot be availed in view of the decision of the Larger Bench in Triveni Engineering and Industries Ltd. reported in (186) ELT 158. For the other items, modvat credit would be eligible in view of the decision of the Larger Bench in Jawahar Mills Ltd. (supra) and in Andhra Sugars Ltd. (supra) and Jindal Strips (supra). As held in Jawahar Mills Ltd. (supra), more particularly in paragraphs 39 and 40 of the judgment, wires and cables would be covered by the expression "plant" being an item necessary to carry on business and not being consumable because of their high degree of durability, and the other items, namely, control panels, cables, welding electrodes etc. would also qualify as capital goods under Rule 57Q for being eligible for modvat credit. In Andhra Suger Ltd. (supra) a division bench of this Tribunal had allowed plea for grant of modvat credit on HDPE pipes. In Jindal Strips reported in (137) ELT 1159, a division bench of the Tribunal held that electrical panels, electric wires and cables, pipes/SS tubes, circuit breakers, switches, etc. were eligible for modvat credit and as held in National Plywood Industries Ltd. reported in (161) ELT 864, modvat credit was admissible in cases of pipes and pump in view of the decisions in Premier Polyfiber Ltd. reported in (113) ELT 192, and in Synthetics and Chemicals Ltd. reported in (111) ELT 705. Even in Jindal Vijaynagar reported in 2005 (191) ELT 459 modvat credit was held to be admissible by the Tribunal in respect of pipes.
7. It is thus, clear that except on welding electrodes, modvat credit was admissible to the appellant in respect of pipes and fittings, cables, control panels, electric insulator, and pumps. As regards LPG storage tank , it is pointed out to us that the respondent -assessee had challenged the order of the Commissioner (Appeals) holding that credit was not eligible on LPG storage tank and that part of the order has been set aside by this Tribunal by order dated 20.9.2005 in Appeal No. E/133/2000-Mum., and by following the earlier decision in C.C.E., Nagpur v. Lloyds Metals and Engg. Ltd. reported in 2004 (177) ELT 740 (T-Mum ), it was held that storage tanks for raw materials were capital goods in relation to manufacture of final products and therefore, were eligible as capital goods for the purpose of modvat credit.
8. We, therefore, dismiss the appeal of the Revenue except as regarding welding electrodes for which it stands partly allowed.
(Dictated and pronounced in the open Court on 12.10.2006)