9911796707
TMI Blog1997 (9) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants are engaged in the manufacture of glass fibre. The manufacturing process involves feeding into the electric melt furnace of various raw materials. The electric melt furnace comprises three essential parts namely, copper bowl with refractory lining, electrodes and raw-material batch distribution system. The copper bowl contains a refractory coating inside its surface which protects the electric furnace from corrosion, etc. The refractory coating should have high temperature resistance as well as capacity to withstand gases, liquid, etc. Further, a substantial part of the plant/equipment used for production of the goods of the appellant are made of various refractory materials such as refractory bricks of special shapes and sizes, fire bricks, etc. The normal operating temperature of the refiner inside the electric melt furnace is 1500 C. After the introduction of Rule 57Q w.e.f. 1-3-1994 appellant declared various items of refractory materials in the list of capital goods as provided under Rule 57T. The Department by a show cause notice dated 23-2-1995 alleged that the appellants had wrongly availed credit on refractory items which did not conform to the definition/sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kund Iron and Steel Works (supra) in which the use of refractories in the manufacturing process of iron and steel products vis-a-vis the admissibility of credit of excise duty under Rule 57A had been considered and had held that refractory materials were not inputs under Rule 57A because these items were covered by the exclusion clause of Rule 57A. He contended that the use of the refractories in the manufacturing process of the appellants was similar to the case considered by the Tribunal in Mukund Iron and Steel case. It was his contention that the refractories and refractory materials used by the appellants were capital goods within the meaning assigned to the term for purposes of Rule 57Q. He contended that though the lower authorities had admitted that refractories were essential heat resistant material used in the operation and maintenance of machines and equipment without which the machines and equipment cannot be put to repeated use, the Commissioner (Appeals) had erred in observing that refractories did not actively participate in the production process. He relied extensively on the observations of the Tribunal in Mukund Iron Steel case as well as other decisions to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit. 10. The appellants contention is that though admittedly refractories were not specifically mentioned in Rule 57Q prior to 16-3-1995, since refractories perform the function of producing or manufacturing of final products they were clearly capital goods used in the manufacture of goods as defined in Rule 57Q. It is their contention that the ratio of decided cases supported this position. In the instant case, the items have already been declared as capital goods. Further, the capital goods referred to in Rule 57Q correspond to goods excluded under Rule 57A, irrespective of their eligibility or otherwise under Rule 57Q as such. Refractories have also been held to be eligible inputs for Modvat credit in terms of Rule 57A. The Department on the other hand has contended that refractories, even if considered as part of machinery, plant or component under Rule 57Q, it came to be included only from 16-3-1995 by virtue of Notification No. 11/95 and, therefore, it cannot be presumed that the amendment would have retrospective effect. 11. I find force in the contention of the appellants. It is no doubt true that Rule 57A provided an exclusion clause which covered machines, mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 57Q. He also disallowed credit on air compressors for air conditioning and refrigeration purposes. 14. Arguing for the appellants Shri Arya, learned Advocate contended that while the Assistant Collector had considered the declaration on Poly Vinyl Alcohol under Rule 57H(1B) and not under Rule 57G, the Collector (Appeals) had taken a different ground, namely, Rule 57G, for disallowing credit. Learned Advocate submitted that this was not correct and contended that the appellate authority could not take a new ground for denying the appellant s claim. Moreover, the impugned order has not given any finding on the appellant s claim based on the interpretation of the words immediately before appearing in Rule 57H(1B). Advocate referred to the Tribunal decision C.C.E. v. Om Forging and Engineering Pvt. Ltd. - 1992 (62) E.L.T. 622 wherein it was held that all inputs received before filing of declaration should be treated as inputs received immediately before making the declaration. I observe that the decision relied on by the learned Advocate in fact has followed the earlier decision of the Tribunal in Soft Beverages v. C.C.E. - 1989 (44) E.L.T. 66. Since Rule 57H begins with a no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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