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TMI Blog2000 (8) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Rules is also not admissible, and has imposed penalty of Rs. 10 lakhs upon the appellants. 2. The brief facts of the case are that the appellants M/s. Gujarat Ambuja Cements Ltd., (hereinafter referred to as GACL) are engaged in the manufacture of cement and cement clinkers falling under Chapter 25 of the Schedule to the CETA 1985. The unit is registered with the Central Excise Department and is paying duty on its final products and availed the Modvat credit on inputs as well as on capital goods under Rule 57-A and Rule 57-Q respectively. They entered into a contract with M/s. Wartisila Diesel India Ltd., Maharashtra (hereinafter referred to as WDIL) for supply of two diesel generating sets for a price of Rs. 15.05 crores. M/s. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,197/- and to recover the same under Rule 57U. Penal action under Rule 173-Q and Rule 226 was also proposed. The Adjudicating Authority confirmed the demand and imposed a penalty of Rs. 10 lakhs upon the assessee. Hence this appeal. 4. We have heard Shri V. Sridharan, learned Advocate, who submits that the entire basis of the impugned order is the issue that the site at which DG sets are installed and erected within the factory of GACL is the factory of WDIL and that this finding is erroneous since the place of assembly of DG sets is part of the factory of GACL as per approved ground plan. He submits that the decision in the case of Superintending Engineer v. Commissioner of Central Excise reported in [1992 (59) E.L.T. 610] which has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to capital goods credit as all parts will be fitted to the main machine although Sl. No. 5 of the Table to Rule 57-Q covers parts as capital goods. In support of his contention, he relies upon the Larger Bench decision in the case of Union Carbide v. C.C.E. [1996 (86) E.L.T. 618]. The learned Counsel submits that the Commissioner has erred in holding that WDIL is the manufacturer of DG sets and that it was GACL who was the manufacturer and WDIL was only supervising the erection and commissioning of the DG sets. He contends that even if WDIL is treated as the manufacturer of the DG sets, as long as parts etc. of DG sets have been used in the factory of GACL, they are eligible to credit under Rule 57-Q. He also submits that GACL w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIL's factory); hence they were not used in the factory of GACL and GACL is not entitled to credit under Rule 57-Q which refers to use in the factory of manufacturer of final product. He highlights the finding of the Commissioner that the two DG sets were manufactured by WDIL and that the parts and components were used by WDIL in the manufacture of DG sets and were not used by GACL. He contends that benefit under Rule 57-T(7) shall also not be admissible as WDIL had not undertaken initial setting up or renovation or modification or expansion of the plant on behalf of GACL and further, WDIL has not paid any excise duty on the manufacture of two DG sets which alone are the capital goods. The learned DR also contends that the benefit under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the Rule). Even if the DG sets which have been manufactured out of these parts and components and accessories, have not discharged duty liability, there is no bar to availment of Modvat credit duty paid on such parts, components, accessories. A comparison of the provisions of Rules 57-D(2) and 57-R(2) will clarify the above position. Rule 57-D(2) states that credit of specified duty shall be denied in case inputs are used in the manufacture of capital goods which are not chargeable to excise duty; however, there is no such stipulation in Rule 57-R(2). There was also no need for such stipulation since Sl. No. 5 of the Table appended to Rule 57-Q(1) covers components, parts and accessories themselves as capital goods. The Commissioner' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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