9911796707
TMI Blog1997 (3) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... 995 and eligibility of D.O. Engine to the credit. I have been consistently taking a view that after amendments to proviso in Rule 57S, the concept of capital goods has been enlarged so as to include vast varieties of capital goods used even in relation to manufacture of final products. In this case I find that the D.O. Engine is used in conjunction with the generator, which in turn is used in running the plants, which is not in dispute. Without these goods supply of electricity to make the plants functional is not possible. In other words manufacturing process of final product cannot be carried out. Therefore, I hold that the D.O. Engine is used in relation to manufacture of final product and entitled to credit in terms of Rule 57Q of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asion to examine the issue of Modvat credit in the context of the use of Fuel Oil in the generation of electricity in the power plant installed in the factory and in that case has held that the power plant could not be considered to be integral part of the manufacturing process of the finished product. Likewise, while considering the benefit of the Fork Lifts in another case in the order referred to by him in the case of M/s. Ferro Alloys Corporation v. CCE vide Order No. 322/97, dated 5-2-1997, of this Tribunal, the Tribunal in the case of capital goods viz. Fork Lifts has held that the benefit could only be allowed if it could be shown that the notified goods could not be manufactured without the use of the said capital goods taking into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods 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 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 enlarged to cover the capital goods with a view to give relief to the industry from cascading effect of duty. The term capital goods therefore has to be read in the context of the use of the equipments in the assessee s factory. What has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the plea made will have to be considered in the light of the judgment of the Hon ble Supreme Court referred to supra. The plea of the Revenue is that the definition of capital goods as set out under Rule 57Q should not be read with the wordings of Rule 57S. We observe that the Modvat Scheme is an integrated scheme and there are various provisions under different rules from which the scope of the scheme can be read. Under Rule 57S it is clearly stated that the Modvat credit in respect of capital goods can be utilised so long as the same were used in or in relation to the manufacture of the final product. This clear provision about the use as above cannot be ignored and the use of the capital goods therefore for Modvat purposes will h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of electricity cannot be taken to be an input for Modvat purpose in terms of Rule 57A. Electricity cannot be taken to be generated as an intermediate product in the manufacturing stream of ferro alloys. The appellants have also taken a plea before us that since in 1995 this fuel oil has been taken to be eligible input, by reason subsequent amendment to Rule 57A the benefit of Modvat credit should be allowed. We observe that this would merit consideration only if it is shown that fuel oil has been used in or in relation to the manufacture of the notified finished product. Here since we have held that plants for generation of electricity cannot be taken to be part of the set up for processes for the manufacture of ferro alloys, the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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