2001 (1) TMI 112 - AT - Central Excise

Summary

Issues involved: Conflict between decisions of Larger Benches in Union Carbide India Ltd. v. Collector of Central Excise, Calcutta and Jawahar Mills Ltd. v. Collector of Central Excise, Coimbatore regarding the scope and ambit of Notification 217/86-C.E.

Summary:
1. The Larger Bench of five Members was constituted to resolve the conflict between the decisions in the above-mentioned cases.
2. Rule 57Q introduced by Notification No. 4/94-C.E. allowed manufacturers to claim Modvat credit on capital goods used in their factory, with a specific definition provided for "capital goods."
3. The definition of "capital goods" under Rule 57Q includes machines, machinery, plant, equipment, apparatus, tools, appliances, components, spare parts, accessories, moulds, dies, generating sets, and weigh bridges used in the manufacturing process.
4. The eligibility for Modvat credit on capital goods is based on whether the goods meet the specified criteria outlined in Rule 57Q.
5. The argument that machinery and appliances under Section XVI of the Central Excise Tariff Act should be the basis for deciding capital goods under Rule 57Q was rejected, emphasizing that the definition in Rule 57Q should prevail.
6. Notification No. 11/95-C.E. expanded the scope of Rule 57Q by including additional items under clauses (d) and (e) for Modvat credit eligibility.
7. The decision in Union Carbide India Ltd. case focused on the definition of "inputs" under Rule 57A, not on the capital goods covered by Rule 57Q.
8. In Jawahar Mills Ltd. case, the Tribunal clarified the eligibility of Modvat credit on capital goods under Rule 57Q, emphasizing the conditions that must be met.
9. The interpretation that wires and cables could be considered "plant" for Modvat credit eligibility was discussed, with a focus on the components, spare parts, or accessories aspect.
10. The argument invoking the principle of "noscitur a sociis" for interpreting the conditions of Modvat credit eligibility on capital goods was deemed irrelevant in this context.
11. Notifications issued in 1995 and 1996 expanding Rule 57Q's scope do not have retrospective effect, and goods covered by these notifications are eligible for Modvat credit from the date of notification.
12. No conflict was found between the decisions in Union Carbide India Ltd. and Jawahar Mills Ltd. cases, with a distinction made between inputs and capital goods for Modvat credit.
13. The questions referred to the Larger Bench were answered, directing individual appeals to be posted before the respective Benches for disposal.