2003 (3) TMI 145

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....There are conflicting decisions on similar issue by co-ordinate 2-Member Benches of this Tribunal as noted in the referral order. The East Zonal Bench, in Associated Cement Co. Ltd. v. CCE [1991 (55) E.L.T. 415], disallowed Modvat credit to the assessee under Rule 57A of the Central Excise Rules, 1944 in respect of Oxygen gas and Dissolved Acetylene gas which were used for repairs of their Cement manufacturing plant. It was held that the said gases were not eligible 'inputs' as they were not used in or in relation to the manufacture of cement (final product). In the case of K.L. Rathi Steels Ltd. v. CCE [2000 (121) E.L.T. 843], a co-ordinate Bench at New Delhi denied Modvat credit to the appellants therein under Rule 57A ibid in respect of ....

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.... Jute & Industries Ltd. [2001 (135) E.L.T. 280] wherein the Tribunal had allowed Modvat credit on Welding electrodes under Rule 57A. Referring to the provisions of Rule 57AA, learned Counsel argued that the definition of "input" under the rule was wide enough to cover the Welding electrodes and gases used for the repairs and maintenance of the capital goods used for the manufacture of final product. In this connection, reliance was placed on the Supreme Court's judgments in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer [1997 (91) E.L.T. 34 (S.C.) = 1965 (16) STC 563 (S.C.)] and Member, Board of Revenue v. Phelps and Co. (P) Ltd. [1972 (29) STC 101 (S.C.)]. 3.Learned SDR defended the order of the Commissioner by dra....

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....for repairs and maintenance of various machines, machinery, equipment, structurals etc. and could not be said to have been used in or in relation to manufacture of cement and clinker (final products). The proposal was to deny input credit to the party. Clause (d) of Rule 57AA defined "input" as follows :- "Input" means all goods, except high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufac....

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....on). They had also not adduced any evidence of any declaration having been filed under Rule 57G prior to 1-4-2000 for availing Modvat credit on Welding electrodes and gases to be used in the manufacture of capital goods (for captive consumption). They had not even furnished the details of any capital goods (for captive consumption) to enable the adjudicating authority to ascertain whether the such goods were covered by the definition of capital goods under Rule 57AA(a). Concurring with the Commissioner, we find that there is no evidence on record to show that any part of the Welding electrodes and gases was used in the manufacture of any capital goods for captive consumption. The entire quantity of Welding electrodes and gases will be held ....

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.... have been used "in the manufacture of goods for sale" within the meaning of Section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1944, then the Welding electrodes and gases used by the appellants in their factory for repairs and maintenance of machinery should be held to have been used "in or in relation to the manufacture of cement/clinker" within the meaning of Rule 57AA(d) of the Central Excise Rules, 1944. We are unable to persuade ourselves to accept this argument which, in our view, is not supported by the ruling of the Apex Court in J.K. Cotton Spinning & Weaving Mills (supra) which was applied by the Court in Phelps & Co. (supra). In J.K. Cotton Spinning & Weaving Mills, the Court had interpreted the expression "in the manufa....