2006 (6) TMI 305 - AT - Central Excise

Summary

Issues: Denial of benefit under Notification No. 67/95-C.E. for pipes used in the factory as capital goods.

In this case, the appellant filed an appeal against the Order-in-Appeal that denied the benefit of Notification No. 67/95-C.E. to the pipes used in the factory, arguing that they are capital goods. The appellant contended that the pipes were crucial for carrying water to various machines in the factory for cooling effects during the manufacturing process. They asserted that as per the definition of relevant period, parts, components, and accessories of machines and machinery within the factory production of excisable goods are considered capital goods. The Notification provides exemption for capital goods used within the factory for the production of excisable goods.

The Revenue, on the other hand, argued that the pipes were not capital goods as they were only used for the supply of water and not in the manufacture of the final product. However, it was acknowledged that water was indeed used in the cooling zone of the plant and supplied to the plant by a tubewell, with the pipes in question being utilized for cooling the plant. The Tribunal found that the pipes were integral to the working of the plant as water was necessary for its operation. Therefore, considering the Central Excise Rules which encompass machines, machinery, plants, components, and accessories, the Tribunal concluded that the pipes qualified as capital goods. As these capital goods were used in the factory production, they were deemed entitled to the benefit of Notification No. 67/95-C.E. Consequently, the impugned order was set aside, and the appeal was allowed.