TaxTMI 
TaxTMI 
2003 (1) TMI 634
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....t scheme to capital goods, they filed declarations in terms of Rule 57T of the Central Excise Rules, 1944 and were availing benefit of Modvat credit on various capital goods used for producing or processing of the final product in their factory. 3. The appellants were issued with a show cause notice dated 20-5-96 and an Addendum to the show cause notice dated 18-8-97 proposing to disallow Modvat credit under Rule 57Q of duty paid on capital goods on grounds that :- (i) the capital goods were not used in the manufacture of iron and steel products but were used in the thermal power plant for generation of electricity; (ii) the capital goods did not satisfy the definition of capital goods; that declarations under Rule 57T were not filed in respect of certain capital goods; (iii) in respect of certain goods declarations were filed after three months; and in respect of certain goods even though declarations were filed within three months, no application was made for condonation of delay; (iv) The show cause notice invoked longer period of limitation on the ground that the appellants had wil....
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.....L.T. 84 & CCE v. Ferro Alloys Corpn. Ltd. - 1997 (70) ECR 841 support the case of the Department. (Paras 5.3 to 5.8 and para 6.1 of the order) 8. 1" 2500 ASSV 1,37,295 9. 200/1500/GVBW 29,860 10. 250/1500/GVBW 4,23,813 11. 8" 1500 GVBW 29,860 12. 8" 600 GVBW 2,94,570 13. Valves 89,810 14. SVSW etc. 73,890 15. Black Dia Pipe 15,603 TOTAL 98,45,330 16. Capital goods used in generation of power 21,13,308 TOTAL 1,19,58,638 C. MATERIAL HANDLING EQUIPMENT AND CONNECTED ITEMS Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Fork Lift Trucks 1,20,458 (1) The items are in the nature of material handling equipments which do not have direct participation in the manufacturing process of the finished goods. (Page 8 of the order) 2. Rotating Fork 26,500 3. Tyres 68,518 4. ....
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....ct participation in the manufacture stream of the final product. 2. HRC Fuses/Fuse links 31,147 3. 250 V Lamp 9,973 4. Starter 20,390 5. Terminal end 4,415 TOTAL 66,260 (b) As regards the following items :- F. ELECTRODES, WELDING POWDER, WELDING SPOOLS ETC. Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Electrode 30,000 Definition of capital goods is restrictive as held by the Tribunal in the case of Shanmugha Raja v. CCE - 1997 (89) E.L.T. 84 & CCE v. Ferro Alloys Corpn. Ltd. - 1997 (70) ECR 841; the goods in question are used for fabrication and maintenance of capital goods which has no nexus with the manufacture of final product. 2. Lotmermi L-352 4,920 3. Stain Erode 9,286 4. Welding powder 399 5. Welding spools 1,08,019 6. Xupen 660 8,453 7. Dupen 680 31,823 TOTAL 1,92,900 we agree with the submission that the Commissioner's reliance on the case law mentioned herein above has been specifically over ruled.....
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.... power project, such goods have no direct participation in the manufacture stream of the final product. 2. HRC Fuses/Fuse links 31,147 3. 250 V Lamp 9,973 4. Starter 20,390 5. Terminal end 4,415 TOTAL 66,260 (e) As regards the following items: - K. COMPUTER & WATER TREATMENT CHEMICAL Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Computer   37,787 Has no role to pay in the manufacturing process And considering the Commissioner's finding against item extracted above, it is found that the actual role of the computer has to be determined. The ld. Advocate submitted that the computer was used for monitoring the performance of the various equipments as well as to provide signals so that the equipments are used in a coordinated manner. Computers used, only for computer aided designing work i.e. CAD use will not be eligible. However, computers used for computer aided manufacture process i.e. CAM use, would be eligible. (....
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.... in the nature of legal interpretation as to whether an item would be eligible for Modvat credit or not. In such a situation, longer period of limitation cannot be invoked. (iii) The jurisdictional Superintendent of Central Excise had issued show cause notices on the very same items proposing disallow Modvat credit on the ground that they were not eligible for Modvat credit. Thus, the eligibility of the items in question to capital goods credit was a subject matter of dispute between the Appellants and the Department since June 1995. For the very same items another show cause notice invoking longer period of limitation cannot be issued by the Department. (iv) Further the show cause notice has invoked the longer period of limitation only in respect of the denial of Modvat credit in respect of the capital goods used for generation of electricity, which allegation, as submitted earlier is not sustainable on merits also. (v) In regard to the other allegation regarding either denial of Modvat credit on other capital goods or non-filing of declarations, the longer period of limitation has not even been invoked. If the show cause no....