2006 (4) TMI 422 - AT - Central Excise

Cenvat/Modvat credit - Inputs - Light Diesel Oil/Furnace Oil used in Power Plant situated 12 kms. away from clinker unit - Steel Plates, H.R. Plates, H.R. Coils, Corrugated sheets, Flats/Angles, Reinforcing bar, Beam/Channels Iron Steel - Galvanized Structure Rolling mills - Welding Electrodes - denial on the various grounds and few of them being inputs not used in the factory, no evidence produced to show that they are using capital goods in respect of transmission line and they are not capital goods etc. HELD THAT - The issue regarding consumption of Steel Plates, H.R. Plates, H.R. Coils, Corrugated sheets, Flats/Angles, etc. in the manufacture of capital goods, is remanded to be decided by the adjudicating authority, afresh after granting the appellants an opportunity of personal hearing. Light Diesel Oil/Furnace Oil used in Power Plant situated 12 kms away from clinker unit - HELD THAT - The Tribunal in the case of HALDIA PETROCHEMICALS LTD. VERSUS COMMISSIONER OF C. EX., HALDIA 2005 (1) TMI 306 - CESTAT, NEW DELHI settled that the credit of duty paid on Light Diesel Oil/Furnace Oil is admissible, if they are sent to job workers and electricity is brought back we find that, in the case before us the electricity is generated by use of Light Diesel Oil/Furnace Oil in their own unit, and we do not find any reason to deny the credit to appellants on this point. Galvanized structure - HELD THAT - This item is used as part of transmission line i.e. line which brings power to the factory from power plant. The issue is covered by the decision of the Hon ble Supreme Court in the case of BIRLA CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE 2005 (7) TMI 104 - SUPREME COURT and followed in COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS MANIKGARH CEMENT LTD. 2005 (8) TMI 119 - SC ORDER . In both the above cases the Apex Court has held that spares used for the purpose of transporting the crushed limestone from the mines situated away from the factory are entitled to Modvat credit. The said ratio squarely applies in this case as these spare are used in transmission line which brings power to the power plant. Appeal allowed in part.

Summary

Issues involved:
Denial of Modvat Credit on specific items including Light Diesel Oil/Furnace Oil, various steel products, Galvanized Structure, and Welding Electrodes.

Analysis:
The judgment involves the denial of Modvat Credit to the appellants on four specific items. Firstly, the issue of Light Diesel Oil/Furnace Oil used in a Power Plant situated 12 kms away from the clinker unit is discussed. The Tribunal referred to a previous case involving Haldia Petrochemicals Ltd. and held that if inputs are sent to a job worker for further processing and received back within a specified time frame, the credit is admissible. In this case, as the power plant generating electricity through the oil is essentially a job worker for the appellant, the credit on the oil is allowed.

Regarding the steel products like Steel Plates, H.R. Plates, H.R. Coils, etc., the appellants claimed that these were used in manufacturing capital goods. The appellants presented substantial evidence to support their claim, and the Tribunal found their proposition fair. The issue was remanded back to the adjudicating authority for a fresh decision after granting the appellants a personal hearing.

The judgment also addressed the credit on Galvanized Structure used in the transmission line bringing power to the factory from the power plant. Citing decisions by the Supreme Court in relevant cases, the Tribunal allowed the credit on the Galvanized Structure as it was considered part of the transmission line necessary for the factory's operations. The Tribunal partially allowed the appeal based on the above considerations.

In conclusion, the judgment provided detailed analysis and references to legal precedents to support the decisions on each of the issues raised regarding the denial of Modvat Credit on specific items. The Tribunal's reasoning was based on the interpretation of relevant rules, previous judgments, and the specific circumstances of the case, ensuring a fair and thorough consideration of the appellants' claims.