TaxTMI 
TaxTMI 
2005 (1) TMI 527
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....issue in all these appeals relate to the disallowance of Modvat credit on certain items on the grounds that they are not capital goods. The details of the goods involved and the amount of duty demanded in respect of each appeal are given in the following tabular column :- S. No. Appeal No. Amount & Period Issue/goods - Modvat credit 1. E/1032/02 Rs. 1,28,21,690/- penalty Rs. 2.5 lakhs Rs. 1,18,73,179/- (party) Penalty Rs. 1 lakh Period - March 98. HR plates, Angles channels, Joists, HR sheets, etc., used in manufacture of OH crane storage tank other Tech structures (nil rate of duty) 2. E/1033/02 Rs. 3,37,69,085/- Period - Jan 98 to Feb 98 Penalty Rs. 2 lakhs 1. H.R. plates used for DG shed, site office working platform, ladders, walk ways, site stores, canteen etc. (nil duty) 2. Structures & parts of structures. 3. E/l 034/02 Rs. 2,88,737/- Penalty Rs. 5000/- Period - March 99 Gas mask & Paroram nova oxy K-50 (Ch. 90-20) (Safety purpose) 4. E/1035/02 Rs. 10,30,195/- Penalty Rs. 1 lakh Period - September 98 Same as Item No. 1 of Sl. No 2 above 5. E/l 036/02 Rs. 42,97,620/- Penalty Rs. 1 lakh Period - April 98 - May 98 HR plates, angles HR sheets, MS bears f....
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....ged that all these items are used for fabricating the support structure which are definitely part of the plant and are capital goods as held by various judicial decisions. The learned Advocate relied on a plethora of case laws to hold that the impugned goods are entitled for Modvat credit as capital goods. The following Tabular column indicates the items, reasons for disallowance of Modvat credit by the department and case laws relied upon by the appellants :- S. No. Item Description Reason for disallowance Relied upon judgments and their ratio in brief 1. MS Equipment Support Structures - Used for fabrication of structures, which are not "goods" Jawahar Mills Ltd. v. CCE - 1999 (108) E.L.T. 47 (Tribunal - LB) - The expression "plant" would cover all items necessary for carrying on the activity of manufacture that are not consumable. All such goods, including cables & wires are Capital Goods. Credit availed on HR plates, sheets, channels, Joists, Crane Rails, Angles, etc. Structures and their parts are immovable Property and not "Capital Goods" Not used "in or in relation to manufacture" CCE v. Jawahar Mills Ltd. - 2001 (132) E.L.T. 3 (S.C.)  ....
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.... Modvat credit cannot be denied on the ground that the goods have become part of an immovable property. Lloyd Metals & Engineers Ltd. v. Additional CCE - [2003 (162) E.L.T. 847 = 2003 (59) RLT 342 (CESTAT)] - Cement & Steel used in the foundation of plant and machinery are eligible Capital Goods. Lloyds Steel Industries Ltd. v. CCE - 2004 (64) RLT 732 (T) - Iron & Steel Structures used to support plant and machinery are eligible Capital Goods. 4. RCC Pipes No evidence led to show use "in or in relation to manufacture" CCE v. Pepsico India Holdings Ltd. - 2001 (130) E.L.T. 193 (T) - Pipes used outside the factory are merely an extension of the pipes used inside the factory, which in turn are used in or in relation to manufacture. Credit cannot be denied. 5. Fabricated Head & Tail Farmers No details of End-Use given Jawahar Mills Ltd. v. CCE - 1999 (108) E.L.T. 47 (Tri.-LB) - The expression "plant" would cover all items necessary for carrying on the activity of manufacture that are not consumable. All such goods, including cables & wires are Capital Goods CCE v. Jawahar Mills Ltd. - 2001 (132) E.L.T. 3 (S.C.....
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....claration filed as Capital Goods sufficient for availment of credit as inputs. 5. We have gone through the rival submissions. In the light of the various judicial decisions, we find that the interpretation of Modvat Rules relating to 'Capital Goods' is very liberal. Hence we cannot subscribe to a very restrictive interpretation of the rules by the Revenue. While interpreting the scope of the terms "Capital Goods" the Apex Court in Commissioner of Central Excise, Coimbatore v. Jawahar Mills Ltd. - 2001 (132) E.L.T. 3 (S.C.) has observed as follows - "4. The aforesaid definition of 'Capital Goods' is very wide. Capital goods can be machines, machinery, plant, equipment, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be 'Capital goods', and, therefore, qualify for availing Modvat credit. Per clause (b), the components, spare parts and accessories of the goods mentioned in clause (a) used for the purposes enumerated therein would also be 'Capital Goods' and qualify for Modvat credit entitlement. Clause (c) makes moulds and dies, g....
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....ition Indicator, Ladle Turner Parts, etc., Modvat credit was disallowed on the ground that the declaration under Rule 57T was not field. In the case of JBM Tools Ltd. v. CCE - 2002 (144) E.L.T. 561 (Tribunal), it has been held that the Modvat credit cannot be denied merely for non-filing of declaration where there is no dispute on the receipt of duty paid inputs/capital goods. There are other decisions also to support of the appellants. Hence we allow Modvat credit for these items. As regards item at Sl. No. 10, HR Steels Cut Coils, it is seen that the same is used in water circulation system which is an accessory of the plant. Hence we have no hesitation in extending the Modvat credit to the same. When certain items are not considered as capital goods, but only as input and if these items are used to manufacture of goods then credit can be extended to them irrespective of the fact that the resulting goods are excisable or not in view of Rule 57D(2). We make this observation only to indicate how liberal the rules are. In view of the above observations we extend the Modvat credit to all the goods in Serial Nos. 1 to 10. The learned SDR observed that certain items are used in sheds a....