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TMI Blog2002 (7) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... the erection, installation and commissioning of the Generating Set for generation of electricity which was called as DG set. The appellants filed declarations under Rule 57T(1) for the capital goods to be received in the factory and accounted for all these items in Part-I and availed the credit in RG 23C, Part-II during May, 1999. The appellants were served with a show-cause asking why the credit of Rs. 1,41,99,862/- availed on the capital goods should not be disallowed as the DG set as per the terms of agreement was manufactured by MMBL and not by the appellants and therefore, the appellants were not entitled to avail the credit. The Show-cause notice was duly replied by the party contending that activity of assembling of the components, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply of the D.G. set on M/s. Wartsil Diesel India Limited. As per purchase order, the set was to consist of diesel engine, generator and other items required for assembly of the complete set. These items were received by them on payment of appropriate duty, in their factory and were used in their factory premises by M/s. Wartsil Diesel India Limited for erection of D.G. set. The appellants took credit of duty paid on the components of D.G. set used in their factory. The said D.G. set after erection was handed over to them on 21-3-1997. But they were issued show cause notice dated 6-2-2001 for denial of Modvat credit on the ground that they were supplied D.G. set only and not parts thereof on which the credit had been taken, by the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in NRC Ltd. And Century Rayon - 2001 (135) E.L.T. 1012 (Tribunal) - 2001 (46) RLT - 609. The Learned SDR has not been able to cite any contrary judgment of the Tribunal or of any higher court.' 5. He also referred to the decision of the WRB Mumbai in the case of CCE Mumbai v. NRC Ltd., and others [2001 (135) E.L.T. 1012 (Tribunal) = 2001 (46) RLT 609]. Both the cases in turn have followed the earlier decision of the Tribunal in the case of Gujarat Ambuja Cement Ltd. v. C.C. reported in 2001 (130) E.L.T. 129 (T). 6. While reiterating the finding given by the Commissioner Shri Narasimha Murthy, learned DR submitted that the generating set was manufactured as exempt from duty. Therefore, by application of Rule 57R(I) credit cannot be tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The requirement that the capital goods must be used in or in relation to the manufacture of the final product is absent. That this difference in wordings is deliberate is clear from the circular of the Board explaining the changes made in the budget of 1994 part of which relates to credit on capital goods incorporated in the Central Excise Rules. Paragraph 71.5 of this circular emphasises that "There is no reference to the expression "used in or in relation to the manufacture of final products." It goes on to say that 'capital goods' acquired by a manufacturer for use in his factory are eligible to Modvat credit." 6. The manufacturer, in each case, acquired the components of the generating set, not for use in the manufacture of the gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt, the manufacturer of the generating set was M/s. Wartsila NDS (India) Ltd., or M/s. Modi Mirrless Blackstone Ltd. However, the credit that is sought to be taken is not the credit of the duty payable, if any, on the generating set. The credit is sought to be taken on the components of the generating set. Here again, the manufacturer is some one other than the person who has taken the credit. Now if the condition is that it is only the person who paid should take the credit, it will mean that credit will only be available on capital goods, if they are solely utilised in the factory of their production. The credit in no case will be available where the capital goods are taken out for fitment or installation in any other factory. Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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