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TMI Blog1998 (10) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... r Modvat credit for the following items under Rule 57Q of Central Excise Rules, 1944 by setting aside the order-in-original dated 29-9-1995 passed by Assistant Commissioner of Central Excise, Udaipur :- (1) Manual Controller and Electronic Regulator. (2) M.S. Chain for Bagasse Elevator. (3) Pressure Reducing Valve. (4) Piston Rings for Compressors. (5) Misc. parts of Material Handling Equipments. While the decision was taken on merits for items 1, 2, 3 and 5, for the item at Sl. No. 4, the Commissioner (Appeals) held that the non-filing of declaration was only a procedural lapse which cannot bar the grant of substantive Modvat concession. 2. In the appeal, it is contended that the impugned order is not legal and correct as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Shri A. Bhattacharya, learned Counsel for the respondent opposed the pleas raised in the appeal and stated that it has been held in a number of decisions by the Tribunal that Modvat benefit under Rule 57Q is admissible for such type of goods, some such decisions being directly in respect of such goods used in similar sugar mills, respondent being one. He referred to the following decisions :- (1) Collector of Central Excise, Meerut v. Mansurpur Sugar Mills Ltd. - 1996 (87) E.L.T. 91. Cane unloaders are capital goods within the meaning of Rule 57Q. (2) Siel Sugar v. Commissioner of Central Excise, Meerut - 1998 (99) E.L.T. 54. Process control instruments, C.I. pulley, safety valve in boilers etc. are capital goods under Rule 57Q. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for bringing about any change in any substance for the manufacture of final products. The underlined portion of the above definition in the Explanation was considered by the Tribunal and it was held that production or process would mean physical processing of the goods and the capital goods must have a nexus for bringing about any change in the substance of the goods by direct participation in the manufacturing stream. On that reasoning, the Tribunal held that humidification plant used by the assessee in that case was not equipment used for production process or for bringing about any change in the substance in the manufacture of final products, it being used only for creating the required atmosphere. The reference application filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee in the spinning mill. It is to be noted in this connection that the restrictive definition of the term capital goods was necessary in view of the fact that in the opening part of the Rule, the benefit of credit stands allowed of the specified duty paid on the capital goods used by the manufacturer in his factory. But for the restriction placed in terms of the explanation clause regarding the manner of use of the capital goods, it would have been open to a manufacturer to claim Modvat benefit under the said Rule for any capital goods even if the same is used in any non-manufacturing activity leading to the production of the specified goods. The restriction that the machinery etc., should be used for producing or processing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable thereunder. The order of the Commissioner (Appeals) in favour of the appellant cannot be faulted as far as the admissibility of such credit on merits is concerned. I uphold that part of the finding and dismiss the appeal. However, the allowing of the appeal by Commissioner (Appeals) in respect of piston rings for compressors on the ground that non-filing of declaration could only be considered as a procedural lapse which would not be a bar for the grant of substantive Modvat concession has been rightly challenged in the department s appeal. The reliance placed by the Commissioner on the decisions of the Tribunal in the case of Chamundi Steel Re-rolling Mills v. C.C.E., Bangalore, 1996 (81) E.L.T. 563 is not appropriate since in that c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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