TaxTMI 
TaxTMI 
2004 (4) TMI 494
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies generating sets and weighbridges used in the factory of manufacturer; (d) ............" After 16-3-1995, capital goods, have been defined as : "Explanation. - For the purpose of this section, - (1) "capital goods" means, following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer, namely :- (a) all goods falling under Chapter 84 (other than those falling under heading Nos. 84.07 to 84.09, Compressors falling under heading No. 84.14 and of a kind used in refrigerating and airconditioning appliances and machinery, heading or sub-heading Nos. 84.15, 84.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.74, 84.76, 84.78, expansion valves and solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and aircon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that these are used for protecting of devices and therefore they are ineligible for credit. At Pages 288-289 of Appeal No. E/3900/98 & internal page nos. 17 and 18 of the impugned order-in-appeal the Commissioner (Appeals) has dealt with earthing cable. The Commissioner (Appeals) in respect of these items has denied the modvat credit by observing as under : "In regard to credit of earthing cables, the purpose is to protect the devices only. Thus, they are ineligible for credit." "These goods are parts of the POY plant. Switch Board Panel are used for providing electrical connections in the plant for the effective working of the production process. Earthing cables are fitted to the plant and machinery to ensure that any power leaks are safely earthed whereby no damage is caused to the plant/equipment parts leading to their stoppage and resultant halt in production." In respect of other items like neutral grounding resistors, earthing wire strip for earthing, earthing control, earthing equipment the Commissioner had denied the credit on identical ground by observing that these are to protect the devices only. II(b) Findings : All the aforesaid items are electric....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be capital goods. The Tribunal followed the decision of Larger Bench in the case of Modi Rubber cited supra. In view of the above, the credit taken on Molecular Sieves is allowable. IV. ICTS for Transformer, Electrical Transformer, Transformer, Accessories for transformers, Distribution Transformer : IV(a) The finding of the Commissioner (Appeals) denying the Modvat credit is as under : "This is an essential part of the POY plant. It performs the function of distributing power to different sections of the POY plant for effective working of the production process. These goods have been specifically removed from the list of capital goods. They are therefore not eligible for credit. The judgments relied upon are irrelevant." IV(b) Findings The only ground given by the Commissioner (Appeals) to deny the Modvat credit on transformer is that only, transformers of power handling capacity exceeding 75 KVA as specified in clause d(vi) of Explanation 1 to Rule 57Q is eligible for credit. Thus, according to the Commissioner (Appeals) only the items specified in clause (d) and used in the factory of manufacturer are covered by the definition of 'capital g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....L.T. 205 (T) = 2002 (102) ECR 75 (Tri.). The Tribunal in the following decisions had taken similar view by allowing Modvat credit on parts of power plant/diesel generating set: (a) Grasim Industries Ltd. v. CCE - 2004 (164) E.L.T. 348 (Tri.); (b) Aditya Cement v. CCE, Final Order No. A/600/03-NBC, dated 22-10-2003. In view of the aforesaid decisions, the part of item covered by clause (c) to Explanation 1 to Rule 57Q are also covered by the definition of 'capital goods'. Hence, the weigh-bridge structure, platform monitor, etc. are eligible items under Modvat as 'capital goods'. VI. Gas Turbine Parts : VI(a) The finding of the Commissioner (Appeals) denying the Modvat credit is as under : "The declared capital goods are the essential part of the Gas Turbine. Gas Turbine is the essential machinery of the Captive Power Plant for power generation which is used in the production process during manufacture of various final products in the complex. These are maintenance equipments of Gas Turbine and not the parts of the Gas Turbine, so credit has been rightly denied". VI(b) Findings The reasons made for allowing credit in respect of item No. V above are e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nothing but structural parts. Therefore credit has been rightly denied. IX(b) Findings It is an undisputed fact that these items are parts of captive power plant boiler. Once it is accepted that boiler is essential for Exothermic process during the generation of electricity and that the boiler is covered by the definition of 'capital goods' under Explanation 1(a) to Rule 57Q, the parts of such boilers are covered by Explanation l(b) to Rule 57Q. X. Disturbance Recorder : X(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "This is an apparatus used in the Captive Power Plant for performing the function of recording the fluctuations occurring in the power supply during generating for analysing the same. This item is specifically excluded from Rule 57Q. Therefore, not eligible for credit." X(b) Findings The Commissioner (Appeals) has given the finding that the item in question is an apparatus used in the 'capital goods' recording the fluctuations occurring in the power supply during generation for analyzing the same. Therefore, the item in question is covered by the definition of 'capit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is case also. XIII. Hydraulic Pallet Truck/Spring Hangers & Supports : XIII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under: - "This is an accessory of POY plant performing the function of handling the packed POY stacked on pallets for their storage/loading at the warehouse. The adjudicating authority rightly disallowed Modvat credit on the said capital goods on the ground that it is not used for producing or processing or for bringing about any change in any substance because the role of item is after the goods are produced. This item does not fulfil the criteria laid down by the Supreme Court judgment in Rajasthan State Chemical Works. Therefore the citations quoted are not applicable." XIII(b) Finding The Commissioner (Appeals) had accepted that this is an accessory of POY plant and it performs the function of handling the packed POY stack for their storage/loading at warehouse. Hence, the item is covered by Explanation l(b) to Rule 57Q. In any event of the matter and the item itself is an equipment performing the functioning of handling of the goods in the factory. They are material handling....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s) the item forms part of the POY plant. Hence, it is covered by Explanation l(b) to Rule 57Q. The reasoning that part itself need not perform the function of producing or processing or for bringing about any change in any substance during the production is equally applicable to this item also. XVII. Industrial Air Screw Fan Type AS : XVII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "This fan is fitted at the Control room of the Captive Power Plant and is essential for providing ventilation. Control Rooms are essentially used for the operation of DCS systems in process/chemical plants." XVII(b) Findings The aforesaid findings of the Commissioner (Appeals) would clearly show that the item is a part of captive power plant. Hence, the fan is covered by Explanation 1(b) to Rule 57Q. XVIII. Spares for Heater Plant, Studs with Buts : XVIII(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid items is as under : "These fasteners for assembling the various components and parts to make the entire plant. Due to their very large size/dimension, various sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re and cannot be granted credit." XX(b) Findings The items in question are parts of switch boards. These are electrical items squarely covered by the decision of the CEGAT in the case of Jawahar Mills v. CCE - 1998 (108) E.L.T. 47 (Tri-LB) upheld by the Hon'ble Supreme Court in the judgment reported at 2001 (132) E.L.T. 3 (S.C.). The submissions that parts of plant, machine, machinery need not play part in the manufacture so long as the machine, machinery, equipment of which it is a part are used for manufacturing process is equally applicable to this item also. Hence, these items are eligible for credit. XXI. Intrinsic Safety Barrier : XXI(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid item is as under : "These are fitted in the digital control system (DCS) for interfacing of signals from the hazardous area in the MEG/PVC plants. They fall under CET 8536.90. In Kanoria Chemicals & Industries Ltd. v. CCE - 1997 (95) E.L.T. 301 (T) = 1997 (23) RLT 693 (T), credit has been allowed on HRC fuses (CET 8532.00) as switch gear cannot function without HRC fuses. However, without the safety barrier the DCS can work. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 8472. XXIV. Spare parts for Industrial Sewing Machine : XXIV(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid item is as under : "These are parts of the PE/PVC/Bagging section. They perform the function of stitching the mouth of the bags, so that the filled final product does not spill out during storage/transport. The operation of stitching the mouth of the bag comes into the picture when goods are manufactured. Therefore, these items are not eligible for Modvat credit." XXIV(b) Findings These items in question are parts of PE/PVC/Bagging section. The ground based onwhich the Commissioner (Appeals) has denied the credit is that the goods have already been manufactured and the operation performed with these items are undertaken after the goods are manufactured. However, the process of bagging is also part and parcel of the manufacturing process. Therefore, these items are covered by the definition of 'capital goods' either under Explanation 1(a) or under 1(b) of Rule 57Q. XXVI. Glass cloth Electrical Insulators : XXVI(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Gas detectors. They are covered by the definition of capital goods in terms of Explanation 1(b) to Rule 57Q. The reasons mentions in respect of the item given at Sl. No. (XVI). supra, that goods covered by Explanation l(b) need not be used for producing or processing of goods is equally applicable to this item also. XXIX. FLP Plug : XXIX(a) The finding of the Commissioner (Appeals) denying the Modvat credit on the aforesaid item is as under : "These are electrical components of the plants providing, electrical connections to the operating sections of the plants. These parts are not entitled for credit." XXX. Bus Ducts & Accessories (Raw & Fire Water) : XXX(a) The finding of the Commissioner (Appeals) denying the modvat credit on the aforesaid item is as under : "These are used for providing electrical connections in the raw & fire water sub-station POY plant for the effective working of the production process." XXXI. Braided Gland Packing : XXXI(a) The finding of the Commissioner (Appeals) denying the modvat credit on the aforesaid item is as under : "These are used for connecting the wires with the junction box at the PVC/ME....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10757 383892 8 Switch Socket & Spares, Front Socket, ELP/WPS 5130 20355 160052 89011 25983 300531 9 Boiler Component, Board Wall, Box, Column, Plate, etc. 73158 151266 224424 10 Disturbance Recorder 140859 140859 11 Flame Proof Equipment 39000 73664 4800 117464 12 S.S. Powder 91403 91403 13 Hydraulic Pallet Truck/Spring Hangers & Supports 88438 88438 14 Catalyst Support Spring 86037 86037 15 Track Ball Assembly 6383....