1999 (7) TMI 141 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit on capital goods under Rule 57Q.

Analysis:
The advocates for the assessees argued that the cases involve the admissibility of Modvat credit on capital goods, specifically concerning the interpretation of Rule 57Q. They contended that their cases align with the judgment of the Larger Bench in the case of Jawahar Mills Ltd. The appeals of the Revenue were urged to be dismissed, while the appeals of the assessees were requested to be allowed with consequential relief.

Opposing these contentions, the learned JDR argued that the expression "plant, machines, machinery etc." in Rule 57Q should be interpreted in a limited manner, akin to Note 5 of Section XVI of the CETA, 1985. He suggested that the scope of this expression should be confined to machines falling under Chapters 84, 85, and 90. He referenced the judgment of the Calcutta High Court in the case of Singh Alloys and the Tribunal's decision in the case of Union Carbide to support his interpretation.

In response, the learned consultant highlighted that wires and cables are also mentioned in Chapter 85, emphasizing the need for a broader interpretation. The advocate pointed out that Chapter Note 5 of Section XVI includes the term "machine," encompassing machinery and plant as well.

Moreover, it was noted that the learned JDR raised a new argument at a late stage, which had not been presented before the lower authorities or during the earlier proceedings related to the Jawahar Mills case. The Legal Officer representing the appellants further argued that wires and cables had been considered as plant in a previous case.

After considering the arguments from both sides, the judge clarified that the definition of "machine" in Note 5 of Section XVI of the CETA, 1985 should not be directly applied to the expression "machine, machinery, plant etc." under Rule 57Q. The purpose of Modvat credit differs from the purpose of the CETA, and thus, the broader definition of "machine" in the CETA should not dictate the interpretation of Rule 57Q. The judge dismissed the appeals of the Revenue and allowed the appeals of the assessees in line with the judgment of the Larger Bench in the Jawahar Mills case, emphasizing that the cases were related to the admissibility of Modvat credit on capital goods, not inputs.