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TMI Blog1997 (5) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing pharmaceutical items and the handling of the materials for feeding the same at different stages of processing is essential and for that reason, therefore, the Modvat credit in respect of these items should be allowed. In this connection he referred us to the judgment of the Tribunal in the case of M.M. Forgings Ltd. v. CCE reported in 1997 (89) E.L.T. 617. In that case taking note of the judgment of the Hon ble Supreme Court in the case of Rajasthan Chemical Works reported in 1991 (55) E.L.T. 444 (S.C.) we have held as under in para 4 of our order : 4. We have considered the pleas made by both the sides. We observe that on reading of the definition of capital goods as set out under Rule 57Q, we ourselves had entertained a doubt prima facie that the equipment like Fork Lifts may not be covered by this definition. A plain reading of the definition would appear to indicate that the activities in which the capital goods are to be used have to be such that these are for either producing or processing of the inputs or for bringing about any change in the materials used for the manufacture of the finished products. However we observe that the scope of Modvat Scheme was en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as above cannot be ignored and the use of the capital goods therefore for Modvat purpose will have to be considered in or in relation to the manufacture of the notified products. We therefore find no force in the plea of the Revenue and we hold that the appellants would be entitled to benefit of Modvat credit in case they are able to show that the use of Fork Lifts is essential in the respondents factory and without the use of the same the Respondents would not be able to manufacture the final product. In this view of the matter we remand the matter to the learned lower authority for this limited purpose. We dismiss the appeal subject to the above observations. 4. The plea of the appellants will have to be examined in the light of the above judgment. The learned JDR for the Department has no objection to this course of action. In view of what we have held in the above cited decision, the order of the learned lower authority in respect of this item is set aside and we remand the matter to the original authority for de novo consideration and decision in the light of the decision above. Diesel Engine and parts of Generator Set 5. The learned Consultant Shri C.K. Gopalakrishnan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is used only for sterilising the equipments and that this operation does not come under the purview of the processing of the final goods. The learned Consultant has pleaded that before the learned lower authority they had submitted that the sterilisation of the equipment is a requirement for the production of the goods. After the production of each batch of the goods sterilisation has to be done on an ongoing basis. This submission, he has pleaded was made before the learned lower authority by the Senior General Manager of the Company. 8. We observe that the learned lower authority has not adverted to a manner in which the equipment is used and whether sterilisation done is an ongoing process as pleaded by the appellants and is an integral part of the process of manufacture. We find that the learned lower authority s order in this regard is rather cryptic. The learned JDR for the Department has no objection to re-consideration of the issue. We observe that the integrality of the equipment with the process of manufacture is what has to be examined for considering whether a particular equipment is used for processing or producing of the goods. The Hon ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. On the same analogy he contended that when weighing scales are performing the very same function, it cannot be said that they are not entitled for Modvat credit. 11. The learned JDR stated that the same cannot go under Rule 57Q 1(c) but it may be considered under Rule 57Q1(a). 12. We have considered the submissions of both the sides. It is now seen that under 57Q1(c) weighing bridges are included and the function of weighing scales are also similar in nature in view of the fact that the same are used for weighing the batches of inputs. In that view of the matter, we are of the view that the credit facility should be given in respect of weighing scales so long as these are used in the manufacturing process for weighment of the material to be fed into the machine. U.P.S. 13. The pleas of the appellants in this regard as set out in para 61 of the grounds is reproduced below :-According to the assessee, the process of manufacture of Penicillin is a continuous one and should be carried on in an uninterrupted manner. Break down of power will ruin the entire batch of production and hence to maintain uninterrupted power supply, U.P.S. is employed. Since they are integral par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of M/s. Shanmugaraja Spinning Mills Pvt. Ltd. v. CCE reported in 1997 (89) E.L.T. 84 (Tribunal) wherein at para 7 it is held as under : 7. It is observed that as urged by the learned DR for the Department, the definition of capital goods as set out under the rules is restrictive and the words used are that capital goods should be such as are used for production, processing or for bringing out any change in the substance for the manufacture of the final products. The three words used in the rules viz. production, processing or for change in the substance would go to show that the capital goods have to be used as one in which the process and manufacture or change in the products are brought about. The term production and process as set out in the Oxford Dictionary are reproduced below for convenience of reference : Process n. 1. Progress, course; in ~ of time as time goes on; natural or involuntary operation, series of changes; course of action, proceeding, esp. method of operation in manufacturer printing, photography, etc. 2. (Print from block produced by) method (e.g. chemical or photographic) other than simple engraving by hand; ~- block, block for printin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the processing equipment and is connected to control the process of manufacturing. He has pleaded that inas much as the equipment is integrated with the processing and production, the same should be taken to be falling under the definition of capital goods falling under Rule 57Q. 21. We observe that the learned lower authority has not set out in his order as to how this equipment i.e.Technical Control Station is used and whether the functioning of the same is integrated with the production line and the equipment used in the production line. In case it is found that this equipment is integrated with the production equipment, we are of the view that the appellants would be entitled to the benefit of the Modvat credit. We, therefore, set aside the order of the learned lower authority in respect of this item and remand the matter to the original authority for de novo consideration and decision in the light of the above. Vacuum Pressure Calibrator 22. The learned Consultant has pleaded that the various equipments required to be re-calibrated after a period of use and has pleaded since these are used for keeping the various equipments to the desired level of performance, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The point to be considered here is that if in a process of manufacture the testing as a part of the production process, is a requirement, whether this act of testing can be considered as processing for the purpose of the definition of the capital goods as set out under Rule 57Q. We find no reason that when handling of the equipment can be held as a process of manufacture, why the testing of the inprocess materials would not qualify as a process for the production of the goods. The issue, therefore, will have to be examined in this light. This not having been done, we hold that the learned lower authority s order is not proper and we set aside the same and remand the matter to the original authority for de novo consideration and decision in the light of the above. Pipes, Valves and pumps, Rubber tubes for air-compressor, Metallic hose for conveying liquid 29. As we have held in the case of Orifice Flange in our findings above that these items by reason of use, in para 74 of the lower authority s order, do not pass the muster of the definition of capital goods as set out under Rule 57Q. We, therefore, uphold the order of the learned lower authority in this regard. M.S. Trolley ..... X X X X Extracts X X X X X X X X Extracts X X X X
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