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2024 (3) TMI 1172 - HC - Central ExciseScope of Capital goods - whether the finding of the CEGAT/CESTAT, applying the ration laid down in the larger bench of CEGAT in the case of JAWAHAR MILLS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE 1999 (4) TMI 153 - CEGAT, NEW DELHI was correct, legal and proper, when the goods are specifically excluded from the purview of Capital Goods as defined in Rule 57 Q of Central Excise Rules, 1944? - HELD THAT - The order of the larger bench of CEGAT was further subjected to challenge before the Hon ble Supreme Court by the Department which stood decided on 27.07.2001 in the case of COMMISSIONER OF C. EX., COIMBATORE VERSUS JAWAHAR MILLS LTD. 2001 (7) TMI 118 - SUPREME COURT where it was held that The stand of the revenue was not as has been projected now by Mr. Rohtagi. In this view, the question of directing remand of these matters for fresh decision by the Tribunal does not arise. On the facts and circumstances of these cases, therefore, the stand that the items in question are not used for manufacture of final product cannot be accepted for the reasons aforestated. The aforesaid view was further considered by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. 2010 (7) TMI 12 - SUPREME COURT wherein, the Hon ble Supreme Court again reiterating the view rendered in the case of Jawahar Mills where it was held that the Tribunal was correct in law in holding that the assessee was entitled to avail of MODVAT credit in respect of the subject items viz. steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Rules In view of the authoritative decision of the Hon ble Supreme Court in the aforesaid two cases, particularly, in the case of Jawahar Mills, which was relied upon by the CESTAT while deciding the appeal of the Department at the first instance which is under challenge in the present appeal, we do not find any merits in the submissions made by the learned Senior Counsel for the Department. The appeal, thus fails and is accordingly rejected.
Issues Involved:
1. Interpretation of the definition of Capital Goods under Rule 57 Q of Central Excise Rules, 1944. The judgment pertains to an appeal by the revenue under Section 35(G) of the Central Excise Act, 1944 challenging an order passed by the Customs, Excise & Service Tax Appellate Tribunal. The main question of law was whether the finding of the Tribunal, based on the case of M/s. Jawahar Mills, was correct regarding the exclusion of certain goods from the definition of Capital Goods under Rule 57 Q. The goods in question included measuring and testing instruments, material handling equipment, Diesel Forklift Truck, and Air Conditioners. The Commissioner of Customs and Central Excise (Appeals) had previously ruled that the testing and measuring equipment, as well as the Air Conditioners, were eligible for credit under Rule 57 Q as they were used in the manufacturing process. This decision was upheld by the CESTAT, citing the precedent set by the larger bench of CEGAT in the case of M/s. Jawahar Mills. The Supreme Court also affirmed this view, emphasizing that the user of an item determines its classification as a Capital Good. In a subsequent case, the Supreme Court reiterated this stance, stating that items used in the manufacturing process, such as steel plates and M.S. Channels, qualify as Capital Goods under Rule 57 Q. Ultimately, the High Court rejected the revenue's appeal, citing the authoritative decisions of the Supreme Court in the aforementioned cases. The Court found no merit in the arguments presented by the Department and consequently dismissed the appeal without costs.
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