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TMI Blog2004 (4) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies generating sets and weighbridges used in the factory of manufacturer; (d) …………" After 16-3-1995, capital goods, have been defined as : "Explanation. -- For the purpose of this section, -- (1) "capital goods" means, following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer, namely :-- (a) all goods falling under Chapter 84 (other than those falling under heading Nos. 84.07 to 84.09, Compressors falling under heading No. 84.14 and of a kind used in refrigerating and airconditioning appliances and machinery, heading or sub-heading Nos. 84.15, 84.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.74, 84.76, 84.78, expansion valves and solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and airconditioning appliances and machinery); (b) all goods falling under Chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "In regard to credit of earthing cables, the purpose is to protect the devices only. Thus, they are ineligible for credit." "These goods are parts of the POY plant. Switch Board Panel are used for providing electrical connections in the plant for the effective working of the production process. Earthing cables are fitted to the plant and machinery to ensure that any power leaks are safely earthed whereby no damage is caused to the plant/equipment parts leading to their stoppage and resultant halt in production." In respect of other items like neutral grounding resistors, earthing wire strip for earthing, earthing control, earthing equipment the Commissioner had denied the credit on identical ground by observing that these are to protect the devices only. II(b) Findings : All the aforesaid items are electrical items specifically covered by the decision of the Larger Bench of the CEGAT in the case of Jawahar Mills - 1999 (108) E.L.T. 47 as upheld by the Hon'ble Supreme Court in the judgment reported at 2001 (132) E.L.T. 3. III. Molecular Sieves : III(a) The relevant portion of the Commissioner (Appeals) order denying the Modvat credit on Molecular Sieves is as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : "This is an essential part of the POY plant. It performs the function of distributing power to different sections of the POY plant for effective working of the production process. These goods have been specifically removed from the list of capital goods. They are therefore not eligible for credit. The judgments relied upon are irrelevant." IV(b) Findings The only ground given by the Commissioner (Appeals) to deny the Modvat credit on transformer is that only, transformers of power handling capacity exceeding 75 KVA as specified in clause d(vi) of Explanation 1 to Rule 57Q is eligible for credit. Thus, according to the Commissioner (Appeals) only the items specified in clause (d) and used in the factory of manufacturer are covered by the definition of 'capital goods'. This interpretation of the Commissioner (Appeals) is incorrect since if the item is otherwise covered by clause (a) or clause (b) or clause (c) of Explanation to Rule 57Q then even if they are not specifically mentioned in clause (d) the said items are covered by the definition of 'capital goods' and eligible for credit. The item specified under clause (d) are merely to be used in the factory of manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o covered by the definition of 'capital goods'. Hence, the weigh-bridge structure, platform monitor, etc. are eligible items under Modvat as 'capital goods'. VI. Gas Turbine Parts : VI(a) The finding of the Commissioner (Appeals) denying the Modvat credit is as under : "The declared capital goods are the essential part of the Gas Turbine. Gas Turbine is the essential machinery of the Captive Power Plant for power generation which is used in the production process during manufacture of various final products in the complex. These are maintenance equipments of Gas Turbine and not the parts of the Gas Turbine, so credit has been rightly denied". VI(b) Findings The reasons made for allowing credit in respect of item No. V above are equally applicable for part of Gas Turbine parts. VII. Lighting fittings and parts, MV/SV chokes, Bulbs T.H. : VII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under :- "These are fitted in the plants for providing essential lighting in the working area whereby visual inspection and effective monitoring of the plants working by the plant personnel can be performed round ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;Disturbance Recorder : X(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "This is an apparatus used in the Captive Power Plant for performing the function of recording the fluctuations occurring in the power supply during generating for analysing the same. This item is specifically excluded from Rule 57Q. Therefore, not eligible for credit." X(b) Findings The Commissioner (Appeals) has given the finding that the item in question is an apparatus used in the 'capital goods' recording the fluctuations occurring in the power supply during generation for analyzing the same. Therefore, the item in question is covered by the definition of 'capital goods' under Rule 1(a) of Rule 57Q. In any event, this is a part of captive power plant and such captive power plant is covered under Explanation 1(a). Therefore, the apparatus in question is covered by the Explanation 1(b) of Rule 57Q. The findings of the Commissioner (Appeals) that these are excluded from Rule 57Q are incorrect for the reasons mentioned in respect of Item No. IV above. XI. Flame Proof Equipment : XI(a) The finding of the Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bringing about any change in any substance because the role of item is after the goods are produced. This item does not fulfil the criteria laid down by the Supreme Court judgment in Rajasthan State Chemical Works. Therefore the citations quoted are not applicable." XIII(b) Finding The Commissioner (Appeals) had accepted that this is an accessory of POY plant and it performs the function of handling the packed POY stack for their storage/loading at warehouse. Hence, the item is covered by Explanation l(b) to Rule 57Q. In any event of the matter and the item itself is an equipment performing the functioning of handling of the goods in the factory. They are material handling equipments covered by the Explanation 1(a) to Rule 57Q. In the following decisions, it has been held by the CEGAT that material handling equipments are capital goods and eligible for Modvat credit: (a) CCE v. Cosmo Ferrites Ltd. - 2002 (148) E.L.T. 1232; (b) Malabar Cement Ltd. v. CCE - 2002 (149) E.L.T. 751 (Tri) maintained by Supreme Court in 2003 (153) E.L.T. A94; (c) CCE v. Vikram Cement - 2001 (132) E.L.T. 662 (Tri). XIV. Catalyst Support Spring : XIV(a) The finding of the Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r providing ventilation. Control Rooms are essentially used for the operation of DCS systems in process/chemical plants." XVII(b) Findings The aforesaid findings of the Commissioner (Appeals) would clearly show that the item is a part of captive power plant. Hence, the fan is covered by Explanation 1(b) to Rule 57Q. XVIII. Spares for Heater Plant, Studs with Buts : XVIII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "These fasteners for assembling the various components and parts to make the entire plant. Due to their very large size/dimension, various sections of the plant are received from the supply source in knocked down condition. At the installation site, the components are assembled together/fitted/ installed to make a complete plant. The studs and nuts are used for fastening the components during such assembly/installation. The role of these items is to the extent of fastening the parts of the plant. These are therefore not eligible for credit." XVIII(b) Findings The reasons already mentioned for Item No. (I) supra namely the fasteners are equally applicable to the aforesaid items also. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these items are eligible for credit. XXI. Intrinsic Safety Barrier : XXI(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid item is as under : "These are fitted in the digital control system (DCS) for interfacing of signals from the hazardous area in the MEG/PVC plants. They fall under CET 8536.90. In Kanoria Chemicals & Industries Ltd. v. CCE - 1997 (95) E.L.T. 301 (T) = 1997 (23) RLT 693 (T), credit has been allowed on HRC fuses (CET 8532.00) as switch gear cannot function without HRC fuses. However, without the safety barrier the DCS can work. They are therefore not eligible for credit judgments cited are irrelevant." XXI(b) Findings The only ground on which the credit is denied that this item is safety barrier of the digital equipments. However, the Commissioner (Appeals) has not disputed that it is a part of digital control system. Hence, this item is covered under clause l(b) of Explanation (1) to Rule 57Q. XXII. Tube closure assemblies & enclosures : XXII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "These are essential components of Spinning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground based onwhich the Commissioner (Appeals) has denied the credit is that the goods have already been manufactured and the operation performed with these items are undertaken after the goods are manufactured. However, the process of bagging is also part and parcel of the manufacturing process. Therefore, these items are covered by the definition of 'capital goods' either under Explanation 1(a) or under 1(b) of Rule 57Q. XXVI. Glass cloth Electrical Insulators : XXVI(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid item is as under : "These are the circuit insulators used at the Cracker plant. The adjudicating authority disallow credit on the ground that this goods are not used for producing or processing or for bringing about any change in any substance. I agree with the decision." XXVI(b) Findings The credit has been disallowed only on the ground that the insulators are not producing or processing. These insulators are parts of cracker plant and therefore they themselves need not produce or process any of the goods. Hence, these insulators are covered by Explanation 1(b) of Rule 57Q. XXVII. Element with Fibre Gla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Fire Water) : XXX(a) The finding of the Commissioner (Appeals) denying the modvat credit on the aforesaid item is as under : "These are used for providing electrical connections in the raw & fire water sub-station POY plant for the effective working of the production process." XXXI. Braided Gland Packing : XXXI(a) The finding of the Commissioner (Appeals) denying the modvat credit on the aforesaid item is as under : "These are used for connecting the wires with the junction box at the PVC/MEG/PE plants. These are the electric items used in the plants performing the function of connecting the wires with the junction box for getting the electric current for manufacturing the final product. These are not eligible for credit." Findings for Sl. Nos. XXIX, XXX and XXXI : They are electrical items and they are covered by the decision in the case of Jawahar Mills v. CCE - 1998 (108) E.L.T. 47 upheld by the Hon'ble Supreme Court in the judgment reported at 2001 (132) E.L.T. 3 (S.C.). 3. In the light of the above discussion we hold that all the items in dispute are capital goods covered under Rule 57Q of the Central Excise Rules, 1944 and entitled to credit, set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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