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TMI Blog2002 (1) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... For the reasons discussed below, I am deciding the main appeal itself. 4. In the grounds of appeal, the appellants inter alia contended that all the impugned items are essential for the manufacture of the final products. They also filed a note indicating the nature of function of each item. They relied on a number of case laws. 5. Let me take up the items one by one :- (a) Diapharm Viton Base : (Rs. 27/-) The appellants contend that in polysius kiln, coal is used as fuel for burning the raw material; for better utilisation of coal, the burning coal gas has to be analysed constantly which is done with the help of gas analyser (measuring equipment) and the diapharm is part of the gas analyser and therefore eligible for capital goods credit. (b) Seamless Steel Tubes : (Rs. 2842/-) The appellants submit that in the coal mill, coal lumps are crushed into powder to plug the escaping coal dust they are using the bag filter to collect the coal dust and recycled the same for burning purposes. The pipes used in this process are part of bag filter system of the coal mill and therefore eligible for capital goods credit. (c) VT Fuse Link : (Rs. 102/-) They contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Century Cements Ltd. reported in 1997 (95) E.L.T. 655, Grasim Cements - 1997 (96) E.L.T. 354 (T), Modi Alkalies Chemicals - 1996 (88) E.L.T. 555 and few others. 7. From the above analysis, I find that all the above items are essentially involved either in the preparation of raw material or at an intermediate stage or one connected with pollution control and so they can be said to be used in or in relation to the manufacture of the final products, namely, cement and each of the above items has an individual distinct role to play in the manufacturing activity. The cited case laws are also in their favour. Therefore, they are eligible for the capital goods Modvat credit. 8. In the light of the above discussions, that part of the impugned order disallowing capital goods Modvat credit is set aside and the appeal is allowed with consequential benefits. In the grounds of appeal, the Revenue has merely stated that all these items going by the any stretch of imagination can be considered as either machinery, machines equipment, tools apparatus, appliances or pats and accessories as defined under Rule 57Q1(a) or 57Q1(b), respectively. They are also excluded from the purview o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as capital goods. We find that the Hon'ble Supreme Court in a batch of appeals after due consideration held that wires and cables are capital goods and found that the language used in the Rule is very liberal to determine whether a particular item qualifies as capital goods or not as this is already built in the definition and the Hon ble Apex Court has held that the stand taken by the department that these items cannot be considered as not used for manufacture of final product cannot be accepted and the Revenue appeals have been dismissed. The findings of the Apex Court are reproduced below : In this batch of appeals the only point in issue is regarding availing of Modvat credit in respect of certain items by the manufacturers treating those items as Capital goods in terms of Rule 57Q of the Central Excise Rules, 1944. The controversy was whether those items were Capital goods or not within the meaning of Rule 57Q. 2. Rule 57Q was introduced by Notification No. 4/94-C.E., dated 1 March, 1994. It enabled manufacturers to claim Modvat credit of duty paid on Capital goods used in their factory. The expression Capital goods has been defined in the Explanation to Rule 57Q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned judgment and order dated 13th April, 1999, considered various items which were involved in different appeals and by a common judgment and order decided the controversy in favour of the manufacturers rejecting the stand of the Revenue that those are not Capital goods within the meaning of Explanation (1)(a) defining Capital goods . Some of the items considered by the Tribunal are: power cables and capacitors in case of Jawahar Mills Ltd.; control panels, cables distribution boards, switches and starters and air compressors in the case of Indian Refrigeration Co. Ltd.; electric wires and cables in the case of Kothari Sugar and Vijay Chemicals. The Tribunal on consideration of the aforesaid provision and various decisions including some of this Court one of it being by a Bench of which one of us (Bharucha, J.) was a member Indian Farmers Fertilizers Cooperative Ltd. v. Collector of Central Excise, Ahmedabad - 1996 (5) SCC 488 came to the conclusion that the items involved qualify as Capital goods under Rule 57Q and would thus be eligible for Modvat credit. The Tribunal did not accept the contention of the Revenue that the items were not Capital goods within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses. The ammonia used in the water treatment, steam generation and inert gas generation plants, which are a necessary part of the process of manufacturing urea, must, therefore, be held to be used in the manufacture of ammonia and the raw naphtha used for the manufacture thereof is entitled to the duty exemption. 6. The contention of learned Additional Solicitor General that the aforesaid decision and other decisions referred by the Tribunal in the impugned order were cases involving sales tax and income tax and, therefore, the Tribunal should not have relied on those decisions is without any substance because the real question is that of the principle laid down by a decision. In view of the liberal language of the provision, Mr. Rohtagi fairly and very rightly did not seriously dispute that if any of the items enumerated in explanation 1(a) is used for any purpose mentioned therein for the manufacture of final products, it would satisfy the test of Capital goods . The main contention of Mr. Rohtagi, however, is that the question whether an item falls within the definition of Capital goods would depend upon the user it is put to. The submission is that parts of the items in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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