2015 (8) TMI 1054

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....o the same even though they are used in the factory of manufacture in the manufacture of final product and form an integral part of the plot set up to manufacture the final product?" 3. We have heard Mr. Sushant Murthy appearing for the assessee/appellant and Mr. Pradeep Jetly for the Revenue. 4. The undisputed facts are that the appellant is engaged in the manufacture of cold rolled plain/galvanised steel coils/sheets. They availed, inter alia, Modvat credit on storage vessels/storage tank/structure classified under Headings 73.11, 73.09 and 73.08 of the Central Excise Tariff Act respectively. They invoked therefore, Rule 57Q to claim and avail of this Modvat credit. The Revenue proceeded against them and issued a show cause notice, calling upon the appellant to show cause why an amount of Rs. 6,83,673/- wrongly availed of as Modvat credit should not be recovered and penalty imposed in terms of the applicable Rules. 5. The reply was given to this notice, in which, the assessee informed the Revenue that it has already reversed the credit to the extent of Rs. 5,52,473/-, a copy of that reply is at Annexure 'B'. 6. Thereafter, an order was passed by th....

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....long as the said column (2) does not and with reference to the tariff item numbers describe the capital goods on which Modvat credit can be availed of, then, the assessee cannot take any assistance of the amended Rule. The amendment was not clarificatory, but for the first time brought in the tariff headings, under which the capital goods of the assessee would fall. In such circumstances and with greatest respect, the Karnataka High Court has not taken a view which would be in consonance with these Rules. He therefore submits that the appeal be dismissed. 12. Rule 57Q of the Central Excise Rules, 1944 reads as under :- "Rule 57Q. Applicability. - (1) The provisions of this Section shall apply to goods (hereafter in this section referred to as the "final products") described in column (3) of the Table given below and to the goods (hereafter in this section referred to as "capital goods"), described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacturer of final products. TABLE S. No. Description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 to 1986) and used in the factory ....

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....ll be allowed credit of the duty of Excise or the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as "specified duty") paid on the capital goods.   (ii) The manufacturer availing of the credit may utilise the same for payment of duty of Excise payable on the final products manufactured in his factory. (3) Notwithstanding anything contained in sub-rule (1), the manufacturer of the final products shall be allowed credit of additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) on goods falling under Chapter Heading No. 98.01 of the First Schedule to the said Customs Tariff Act, to the extent of 75% of the said additional duty paid on such goods. (4) A manufacturer of the final products purchasing capital goods from a unit situated in a Free Trade Zone or from a hundred per cent. export-oriented undertaking or from a unit in an Electronic Hardware Technology Park or Software Technology Parks and using them in the manufacture of final products, shall be allowed to take the credit of the specified duty paid on such capital goods only to the extent of duty which is ....

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....of the manufacturer are the once which go into the manufacture of final products. It is on them that the credit can be availed of. That can be availed of in respect of the duty on the final products and leviable in terms of the Central Excise Act and Tariff thereunder. In these circumstances, the goods falling under specific heading numbers have been set out in column (2) against serial numbers. The components, spares and accessories of the goods specified against serial numbers 1 to 4 alone are referred and without specific heading numbers. Moulds and dies, the refractories and refractory materials, tubes and pipes and fittings thereof used in the factory, pollution control equipment, lubricating oils, greases, cutting oils and coolants are the items or capital goods which have been set out without reference to any heading numbers. In referring to grinding wheels and the like goods falling under sub-heading No. 6801.10, description is once again referable to serial numbers 1 and 2. Therefore, when internal combustion engines are excluded from the description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985 and used in the factory of the manufactu....

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....he Karnataka High Court, holding that they are not eligible to avail and utilise the Cenvat credit on the capital goods such as (i) all the goods falling under Chapters 82, 84, 85, 90 under the Headings 6802, 6801.10 of the First Schedule to the Tariff Act; (ii) the pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii) above; (iv) moulds and dies; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; (vii) storage tanks used in the factory of the manufacturer of final products. There, the assessee was manufacturing the final products. The further reading of this judgment would reveal that the items in Para 2 of the judgment find place in column (2) of Rule 57Q, as applicable prior to 1st March, 2001. It is in relation to this aspect and particularly the MS Plates, Channels, MR Coils and HR Coils, in respect of which the Cenvat credit was availed of and utilised that the learned Judge presiding over that Bench concluded that the issue is identical to one decided and dealt with in CEXA/95/2009 disposed of on 8th April, 2011 [2011 (271) E.L.T. 360 (Kar.)]. The assessee before us relies upon the view....

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....inition of capital goods the storage tank is inserted. Therefore, for the period anterior to the said amendment the Cenvat credit could not have been given on the inputs used in the manufacture of storage tanks. Even otherwise though the water stored in a storage tank is used in the manufacture of sugar, the syrup and molasses stored in the storage tank are not used in the manufacture of sugar, on the contrary it is derived in the course of manufacture of sugar and therefore, the assessee is not entitled to the benefit of Cenvat credit. Though in the definition of Rule 57Q the storage tank was not included, it is clear from the aforesaid definition that the tubes, pipes and fittings thereof used in the factory were included in the definition of capital goods. The storage tank has been held to be a component to the main machinery namely, boiler and the benefit is extended to the inputs used in the construction of the storage tank though it is also embedded to the land. On the same reasoning the assessing authority ought to have extended the benefit to the syrup and molasses storage tank also, as they are bye-products in the course of manufacturing activity which are also excisable a....