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TMI Blog2010 (12) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;Sheets (7219.11) (ii) tubes (7305.90) (iii) Steel Wire Rope (7312.10) 13,60,043/- 6,60,683/- These are used for the manufacture of capital goods availing exemption under Notification No. 217/86. Credit is admissible as per provisions of Rule 57D(2) For Sl. No. 1 & 2 : Appellant have admitted that these goods were not used as input, in or in relation to the manufacture of their specified final product by virtue of their use, whereas Notfn. No. 217/86 specifically exclude 'capital goods'. They have neither disclosed the particulars of any specific machine/machinery or any other capital goods said to be manufactured out of these goods. (2) (i) Non ST Billets/Blooms (7207.90) (ii) Billets (7224.00) (iii) MS Rounds & Flats (7214.90) (iv) Steel Forgings 2,15,394/- 1,72,202/- 1,16,017/- 13,500/- These are used in the forging shop to manufacture intermediate goods which is exempt from duty by virtue of Notification No. 217/86 and credit is admissible as per provisions of Rule 57D(2) &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under Rule 57Q. Appellant had failed to submit evidence indicating details of machine/machinery for which such components, spare parts and accessories (made from intermediate capital goods) were used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product. The expression "used in various workshops in the manufacture of various capital goods" was very ambiguous unless the name of machine/machineries and its function were specifically mentioned by the appellant. In the case of Jawahar Mills Ltd. [2001 (132) E.L.T. 3 (S.C.)], the Apex Court had held that the manner of use of goods was to be ascertained before any goods were adjudged to be capital goods under Rule 57Q. Also Rule 57Q was amended vide Notification No. 14/96-C.E. (N.T.), dated 23-7-1996 so as to include tubes and pipes. Hence credit availed during October 1994 on these items was correctly denied by the original authority, these being neither inputs under Rule 57A nor capital goods under Rule 57Q. 2.1 As regards Sl. No. 4, namely grease, it had been included in the explanation to Rule 57Q vide Notification No. 6/97-C.E. (N.T.), dated 1-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (T)]. (ii) Tubes/sheets : These goods were used in workshops of the factory in the manufacture of various capital goods. These capital goods are removed on payment of duty or under exemption under Notification No. 217/86. As per rule 57Q(1) these parts of machines were eligible for Modvat credit. Tubes were specifically included in capital goods under Rule 57Q. (iii) Non ST Billets/Blooms/Steel forgings/MS Rounds & Flats/Billets : It is claimed that these goods were used in the workshops in the manufacture of various capital goods. These are removed on payment of duty or under exemption under Notifications No. 67/95 or 65/95 as these capital goods were used in the manufacture of final products. These were used in foundry shop, forge shop, steel structural shop, machine shops and TPL workshop for the manufacture of different spare parts/components/accessories. They followed a system of accounting whereby items were received at the central plant, stored for centralized accounting and issued. Where the goods were used outside the plant, credit was reversed. Credit was availed to the extent goods were used in the factory of production. The items manufactured in the worksh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra copies of invoices, appellants submitted that the Commissioner (Appeals) had followed incorrect reasoning in the light of amendment to Rule 57G and Rule 57T vide notification No. 7/99-C.E. (N.T.), dated 9-2-1999 and also the Circular No. 441/7/99-CX., dated 23-2-1999 issued by the CBEC. 6. Paragraph 2 of the said Circular which reads as follows is particularly relied on : "2. The Assistant Commissioner, before issuing Show Cause Notice for wrong availment of Modvat credit by the assessee on any procedural grounds, shall conduct enquiries with regard to duty paid nature of the goods as the suppliers send, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whether the goods have been used or are intended to be used as contemplated in the Modvat Rules. In case the assessee's invoice contains the details viz. description of the goods, assessable value, name and address of the factory or warehouse where the goods are to be received, and if the assessee has filed a declaration as contemplated in the Modvat rules, the Assistant Commissioner having jurisdiction over the factory would allow the credit of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mative by squarely following the ratio of the decision of this Tribunal in Union Carbide India Ltd. (supra). Accordingly, we hold that the lubricants in question were used in or in relation to the manufacture of paper products and the same qualified to be "inputs" for the purpose of Modvat credit under Rule 57A during the relevant period." Following the above decision, we allow credit relatable to grease, received by the appellants during the material period. 9.1 As regards admissibility of credit on the other items (Sl. No. 1 & 2 of the table), we find that the Commissioner found that the assessee had failed to submit evidence indicating details of machine/machinery for which components/spare parts and accessories were manufactured using the goods and if the machine/machinery were employed for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product. The assessee had claimed the benefit by stating that these items were used in its various workshops in the manufacture of various capital goods. This was ambiguous and the concerned machine/machinery with their function had not been specifically mentioned. Relyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jasthan High Court held that where any particular process is integrally connected with the process of manufacturing the final product and without which manufacturing could not be viable, then the goods used in such process would be covered for credit purpose. In Aditya Cement case (supra) the Rajasthan High Court while setting aside the order of the Tribunal in that regard in Aditya case (supra) held that iron and steel ingots used as parts and components and its machinery used in manufacturing cement, railway track materials needed for transporting fuel, are essential for manufacturing process, then such component and parts of machine would be eligible for modvat credit. All these cases were decided on the basis of facts of each of the cases and the materials on record being sufficient to establish the claim. Being so, they are of no help in the matter in hand at this stage." The above observations are very much relevant to the instant case. It is for the appellants to establish with evidence its entitlement to credit claimed on the disputed goods. We therefore remand the dispute for a fresh decision by the Commissioner. 9.3 As regards the credit of Rs. 14,20,379/- denied f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed toward reduction of litigation. 4. All pending cases may be disposed of accordingly. 5. Trade and field formations may be suitably informed." We note that the Circular clarified that the notification was issued long after the material period. Therefore, the assessee cannot claim the benefit of notification or the Circular. In any case, the Circular does not cover cases of the type in question. 10. We find that in CCE, Meerut-I v. Modi Rubber Ltd. case (supra), the Tribunal had considered a similar dispute and decided the same against the assessee. The party had taken credit on the strength of original copy of the invoices without satisfying the jurisdictional Assistant Commissioner that the "duplicate for transporter" copy of invoice had been lost. In holding against the assessee, the Tribunal relied on another decision of the Larger Bench of the Tribunal in the case of CCE v. Avis Electronics Pvt. Ltd. & Others [2000 (37) RLT 501 = 2000 (117) E.L.T. 571 (Tri.-LB)] wherein the Bench had decided a similar dispute pertaining to the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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