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TMI Blog2009 (2) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ute in the present appeal relates to the availability of the input credit in respect of the plastic crates either as capital goods or as input. After hearing both sides, I find that there are conflicting decisions on the said issue....... .........In as much as there are conflicting decisions I would like the matter to be resolved by Larger Bench Accordingly, Registry is directed to forward the papers to the Hon'ble President for constitution of Larger Bench." As such, Larger Bench is required to decide as to whether the plastic crates used by the appellant as a material handling device within their factory premises would earn modvat credit either as capital goods or as input. Such plastic crates are used for internal transportation of the raw material/semi-finished and finished goods from stores to processing machine and from one machine to other machine and to finished goods storage. As such, they are mainly used for storage and supply of different components of radiators, in the production of which the appellant is engaged, in the production line. These plastic crates, due to wear and tear on account of usage are also periodically replaced by the assessee. 2. We have con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories" are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument. 7. The Hon'ble Supreme Court in the case of M/s. Annapurna Carbon Industries Co. v. State of Andhra Pradesh (AIR 1976 SC 1418), while dealing with the provisions of Andhra Pradesh General Sales Tax Act, observed in Para 10 as under: "Para 10. We find that the term "accessories" is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word accessory is used is given in Webster's Third New International Dictionary as follows : "an object or device that is not essential in itself but that adds to the beauty, convenience or effectiveness of something else." Other meanings given there are : "supplementary or secondary to something of greater or primary importance", "additional", "any of several mechanical devices that assist in operating or controlling the tone resources of an organ". "Accessories" are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessory" as defined in The New Collins Concise Dictionary of the English Language (1982) as "a supplementary part or object, as of a car, appliance, etc". Other definitions for the accessory are found in the Advanced Law Lexicon (3rd edition, 2005) and include the following: "Something of secondary or subordinate importance: Something contributing in subordinate degree to a general result or effect; an adjunct or accompaniment;" 10. Thereafter, the Court took note of the earlier decisions in case of M/s. Annapurna Carbon Industries Co. and also in case of M/s. Mehra Brothers and it was observed in Para 21 as under: "21. It is evident therefore, that an 'accessory' by its very definition is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product. Applying the test laid down in Mehra Bros, case (supra), it cannot be denied that name plates add to the convenient use of the motor vehicle. Name plates serve a very useful purpose inasmuch as it gives an identity to the vehicle. Each vehicle comes with different brand name and in different models having distinct features. The manufacturers of different type of models ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstituted or replaced. An accessory, on the other hand, means something which contributes in a subordinate degree to attain a general result or effect. For example, oil-cans or steel files would be accessories of chaff-cutters. If a machinery cannot be worked without the part, then it ceases to be an accessory. If it adds merely to the convenience or effectiveness of a machinery like a speedometer it would be an accessory. A motor vehicle could run without a speedomotor." 13. Similarly, in the case of M/s. Eureka Forbes Ltd. v. CCE, Chandigarh 2000 (120) E.L.T. 533 (Tri.-LB), it was observed that an object was a device which add to the effectiveness of something else, cannot be an integral part of the equipment but can only be an "accessory". Similarly, in the case of CCE, Calicut v. M/s. Keltron Components Complex Ltd. 2005 (191) E.L.T. 580 (Tri.-Bang.), Revenue's appeal was rejected by observing that the Commissioner (Appeals) has rightly observed that though the plastic crates are not used for manufacture of capacitors and resistors, they add to the convenience for collecting machine out put and shifting to the next stage of production and hence, they serve as aid fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fectiveness of working of that machine. The plastic crates in question are used for transportation of the raw material to the processing machine and all the finished goods from the machine to the storage area. It can be argued that instead of using such plastic crates as material handling device, the various components or the inputs can be carried manually also. However, the question is as to whether such transportation of the inputs or semi-finished goods in the factory would be convenient way of dealing, and whether the same would not hamper the continuous working of the machine on account of delays in the delivery of the raw material etc. It may be possible in theory to do so, but is neither practical nor possible to do in the actual manner. The delivery of the raw material in time for increasing the effective working of the same and then removal of the finished goods from the vicinity of the machine contributes may be in a subordinate degree to attain a general result or effect. Same adds to definition of effectiveness of the machinery, and when viewed and judged in the light of interpretation of the term "accessory" by various Courts, the plastic crates are required to be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified at Sr. No. (i) above. As such, the above decision can be considered as having been given by consensus and without adverting to the fact as to whether the plastic crates would be covered by expression accessories appearing in Sr. No. (iii) of Rule 2(b). The said decision Was subsequently followed in another decision given by the same Bench in the case of CCE Salem v. M/s. Sugavaneswara Spinning Mills (P) Ltd. - 2006 (199) E.L.T. 698 (Tri.-Chennai). 19. Further, in the case of M/s. Hindustan Seals Ltd. v. CCE Kolkata-II 2006 (196) E.L.T. 302 (Tri.-Kolkata), the claim of the assessee for availing Modvat credit of duty paid on the plastic crates was under Rule 57A and 57B as 'inputs'. The claim for admissibility of the credit as capital goods was not one of the issue before the Bench. As such, it can be recorded that M/s. PKPN Spinning Mills' case and followed subsequently in M/s. Sugavaneswara Spinning Mills' case, was by way of concession and M/s. Hindustan Seals judgment having not considered the availability of credit as capital goods, there is no decision holding against the admissibility of the plastic crates as accessory. In any case, having elaborately di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue disputed before us, it has to be held that the process of manufacture starts with the process of handling of the raw material and resultant use of plastic crates for movement of such raw material, in which case, the plastic crates would earn their status as inputs. 22. Similarly, in the case of Collr. of C.E. v. M/s. Solaris Chemtech Ltd. - 2007 (214) E.L.T. 481 (S.C.), it was reiterated that the expression "in or in relation to manufacture" of final product must be given a wide connotation. A reference, at this stage, may also be made to Larger Bench decision of the Tribunal in the case of M/s. Union Carbide India Ltd. v. CCE - 1996 (86) E.L.T. 613 (Tri.-LB), laying down that the words "in relation to the manufacture" has been used to widen and expand the scope, meaning and content of the expression "inputs" so as to attract the goods which do not enter directly or indirectly into the finished product, but are used in any activity concerned with or pertaining to the manufacture of the finished goods. 23. By various decisions of the Tribunal, in number of cases, it has held that the equipment used for collecting, transporting or dispensing material being nec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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