1992 (10) TMI 168 - AT - Central Excise

Issues Involved:
1. Condonation of delay in filing the Reference Application.
2. Eligibility of Modvat credit for felts and wire-netting.
3. Definition and scope of the term "machinery" under Rule 57A of the Central Excise Rules, 1944.
4. Exclusion of items from the scope of the term "input" in Rule 57A.
5. Eligibility of Modvat credit for chemicals and resins used in water treatment.

Detailed Analysis:

1. Condonation of Delay in Filing the Reference Application:
The Collector of Central Excise, Bhubaneswar, filed Reference Application 3/92 after the statutory time limit, supplemented by a Miscellaneous Application for condonation of delay. The delay was marginal and condoned by the Tribunal, allowing the Reference Applications to be taken up for disposal.

2. Eligibility of Modvat Credit for Felts and Wire-Netting:
The Tribunal held that M/s. Straw Products Ltd. is entitled to the benefit of Modvat credit for wire netting of stainless steel, phosphor bronze, and felts (articles of textile material). These items are not classified as machinery, equipment, or appliances and thus do not fall under the exclusion provision of Rule 57A of the Central Excise Rules, 1944. The Tribunal rejected the argument that these items should be excluded based on their dictionary definition as parts of machinery, relying on judicial decisions to support their conclusion.

3. Definition and Scope of the Term "Machinery" Under Rule 57A:
The Tribunal examined whether the term "machinery" in the exclusion clause of Rule 57A includes parts of machines. The Tribunal relied on the principle of noscitur a sociis, interpreting "machinery" in the context of other items listed in the exclusion clause, such as machines, plant, equipment, apparatus, tools, or appliances, which are complete items capable of independent functioning. The Tribunal concluded that felts and wire-netting, being consumable items requiring periodic replacement and not complete items, do not fall under the term "machinery."

4. Exclusion of Items from the Scope of the Term "Input" in Rule 57A:
The Tribunal addressed whether items excluded from the scope of the term "input" in Rule 57A, such as machines, machinery, plant, equipment, apparatus, tools, or appliances, cover only complete items capable of independent functioning. The Tribunal found that while certain tools and instruments may function only when mounted on other equipment, they are still distinct articles known as such and are specifically excluded in the Explanation clause. However, felts and wire-netting are not known as parts of the paper-making machine and thus do not fall under the exclusion.

5. Eligibility of Modvat Credit for Chemicals and Resins Used in Water Treatment:
The Tribunal upheld the eligibility of Modvat credit for chemicals and resins used in water treatment, treating them as goods used in or in relation to the manufacture of paper. The Tribunal relied on the Supreme Court's decision in Collector of Central Excise v. Ballarpur Industries Ltd., which held that the use of chemicals and resins in water treatment is in relation to the manufacture of paper. The Tribunal concluded that the process of water treatment carried out in relation to the manufacture of paper meets the requirements of Rule 57A, and thus, Modvat credit is admissible.

Conclusion:
The Tribunal dismissed the Reference Applications filed by the Collector of Central Excise, Bhubaneswar, finding no substantial questions of law that warrant a reference to the High Court. The Tribunal emphasized that the issues raised were adequately covered by existing judicial decisions and did not present any debatable or problematic questions of law. The Stay Petitions filed by the Collector were also rejected.

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