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TMI Blog2000 (11) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC BPL and the submissions made by Sri C. Chidambaram, learned Consultant, during the course of personal hearing. 5. The issue for consideration is whether the capital goods used for installation of a power plant are eligible for Modvat credit. 6. In the Show Cause Notice it has been alleged that ITC BPL have manufactured power plant which is excisable under sub-heading 8502.90 of the Central Excise Tariff Act, 1985. Since ITC BPL have not paid the appropriate Central Excise duty on the power plant , the Modvat credit availed on the capital goods used for the manufacture of the said power plant is liable to be disallowed. It is further alleged that even if ITC BPL chooses to pay excise duty on the power plant, they are not eligible to Modvat credit as the product manufactured by the power plant is electricity which is non-excisable . 7. In their reply to the Show Cause Notice, ITC BPL contended that classification of the power plant under sub-heading 8502.90 is totally erroneous. According to them, Power plant cannot be considered to be goods as much as ab initio it came into existence by being attached to the earth . 8. During the course of personal hearing, ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. As alleged, ITC BPL have contravened the provisions of Rule 174 ibid inasmuch as they failed to obtain registration for manufacture of the excisable goods, namely, power plant, and also failed to file declaration under Rule 173B ibid thus making themselves liable to penalty under Rule 173Q(1)(bb) ibid. 11. Having regard to the facts and circumstances of the case, I pass the following order : 2. Learned Sr. Counsel Sri M. Chandrasekar, assisted by the learned Consultant Sri C. Chidambaram argued for the appellants and pointed out that the order impugned is not a speaking order and all the points raised by the appellants in reply to show cause notice have not been answered. It has been specifically pointed out that the finding portion given by the Commissioner in the order impugned is totally in difference to the case made out in the show cause notice dated 2-2-98. It is his contention that the appellants are manufacturers of paper and paper-board and in order to set up the said unit they had imported capital goods. They had been filing regularly declarations in terms of Rule 57Q of the Central Excise Rules. The declaration clearly indicated that the duty had been paid on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emicals Ltd. - [1998 (102) E.L.T. 321 (T) = 1998 (25) RLT 753] ; DCW Ltd. - [1997 (96) E.L.T. 733]. Senior Counsel further pointed out that in an identical matter i.e. in the case of Gujarat Ambuja Cements Ltd. as reported in [2001 (130) E.L.T. 129 (T) = 2000 (40) RLT 453], the Tribunal held that the parts used for assembly of D.G. sets which were producing electricity, which was in turn used in the manufacture of cement was entitled for the benefit of Modvat credit in terms of Rule 57Q for capital goods. He points out this ratio of the judgment would squarely apply to the facts of the present case and there is no reason for taking a different view from this judgment. He also filed a copy of the drawing of the power plant which is a part of the approved factory plan. He submits that the approved power plant is a part and parcel of the factory in terms of Rule 57Q, any item which is mentioned in column No. 2 which falls within the Chapter items utilised for the manufacture of the final product and as indicated in column No. 3 used within the factory would be entitled to the benefit of Modvat credit as capital goods. He submits that there is no dispute about the power plant wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not arise. He contends that the plan now submitted is not authenticated by the officers and it does not show that it is a part of the approved factory plan. Merely because, a portion of the factory plan includes power plant and that by itself is no ground to consider that the imported items declared which finds place in serial no. 2 of the Notification are deemed to have been utilised for the manufacture of the goods stated to be within column No. 3 of the Notification. Although column No. 3 may show paper and paperboard but only those items which have gone to set up the plant for paper and paperboard would be eligible for Modvat credit. Admittedly, the items in question were not at all utilised for setting up of the plant for paper and paperboard but it was only power plant to generate electricity. He contends that HSD oil which was utilised in generating electricity was also held to be not eligible for Modvat credit in terms of the Finance Bill which has been applied by the Larger Bench of the Tribunal in denying the Modvat credit on HSD oil used in the manufacture of electricity. He contends that electricity so manufactured by the appellants was also used for other purpose lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are required to reverse the same. The appellants had strongly taken a view that there was no intermediary products coming into existence for the purpose of duty - i.e. electricity. On this ground, the Commissioner has not given any findings but merely held that the judgment of Supreme Court rendered in the case of Sirpur Paper Mills Ltd. would squarely apply to this case. The contention raised by the appellant that this judgment was in the context of the assessee having admitted the power plant machinery being goods, therefore, it negatived the subsequent plea that it was immovable property on the plea that the goods had already come into existence and it was embedded to earth only for the purpose of affixing the same. This view of the Apex Court has been deferred and the Hon ble Apex Court has taken a clear cut view in the case of Quality Steel Tubes Pvt. Ltd. (supra) and Mittal Engineering Works Pvt. Ltd. (supra) and in the latest case of Triveni Engineering Inds. Ltd. as reported in 2000 (120) E.L.T. 273 that the goods have to come into existence prior to the same being affixed to the ground and becoming part and parcel of the immovable property. There is no finding given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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