2005 (98) ECC 82 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(SM)

Shri K.C. Mamgain, Member (T)

CCE, Indore

Versus

Siddharth Tubes Ltd.

Appeal No. E/1697/03-NB(SM)

[Arising out of Order-in-Appeal No. 48-CE/IND/APPL-II/03 dated 28.2.2003 of the Commissioner of Central Excise (Appeals), Indore]

Final Order No. A/1306/2004/NB(SM), dt. 21.9.2004, Certified on 4.10.2004

Modvat Credit

Rule 57Q(1) of the Central Excise Rules, 1944 -- Heading 8415.00 -- Credit cannot be allowed on Air conditioner.

Penalty (C. Excise)

Rule 57Q(1) of the Central Excise Rules, 1944 -- Heading 8415.00 -- Since credit on air-conditioner was a matter of interpretation -- Penalty unsustainable.

PRESENT :

Shri P.M. Rao, SDR for the appellant.

Shri Bipin Garg, Adv. for the respondent.

Cases Cited :

1. CCE, Coimbatore v. Brown & Burk Ltd., 1998 (104) ELT 694 (Tri)...................... [Para 2]

2. CCE, Coimbatore v. Titan Industries Ltd., 1997 (96) ELT 398 (Tri)..................... [Para 2]

3. J.C.T Electronics v. CCE, Chandigarh, 2000 (124) ELT 541 (Tri)........................ [Para 3]

4. Tractors And Farm Equipment Ltd. v. CCE, Bangalore, 2003 (156) ELT 938 (Tri-Bang.) [Para 3]

Per : K.C. Mamgain

Shri P.M. Rao, SDR appearing for the Revenue pleaded that the respondents have taken Modvat credit on Air-conditioner falling under Heading 8415.00 on the strength of Invoice No. 1 dated 15.6.98.

2. The Commissioner (Appeals) however, allowed the credit on Air-conditioner and also set aside the penalty imposed on the respondents by the original authority. Ld. SDR pleaded that if the goods are used in or in relation to the manufacture of the final products, the said goods are eligible for credit. In the instant case, the Air-conditioners were used to maintain the appropriate standard temperature for galvanising line electrical control room for electronics of the plant. However, at the relevant time the Air-conditioners were excluded from the definition of capital goods under Rule 57 Q(1). He, therefore, pleaded that the credit is not allowable and the order of the Commissioner (Appeals) may be set aside. He also relied on the decisions of the Tribunal in case of CCE, Coimbatore v. Titan Industries Ltd., 1997 (96) ELT 398 (Tri) and CCE, Coimbatore v. Brown & Burk Ltd., 1998 (104) ELT 694 (Tri).

3. Shri Bipin Garg, Ld. Advocate appearing of the respondents, produced the photographs of the Control Room and the other places of the factory where the Air-conditioners are being used and he has also relied on the decision of the Tribunal in the case of Tractors And Farm Equipment Ltd. v. CCE, Bangalore, 2003 (156) ELT 938 (Tri-Bang.), wherein it was held that parts of Air-conditioning plant, being essential for completion of process of manufacture and integrally connected with final production, parts of Air-conditioning plant is eligible for Modvat credit. He has also referred to the decision of the Tribunal in the case of J.C.T. Electronics v. CCE, Chandigarh, 2000 (124) ELT 541 (Tri). He also referred to Rule 57Q(1) whereunder the Table to the said Rule, the description of the capital goods which are used in the factory for the manufacture of final products are mentioned as under:

"2. All goods falling under Chapter 84 (other than internal combustion engines falling under heading No. 84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under heading No. 84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub-heading Nos. 84.15, 85.18, 8422.10 [8424.10, fire extinguishers falling under sub-heading No. 8424.80, 8424.91, 8424.99], 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and air-conditioning appliances and machinery);"

4. I have carefully considered the submissions made by both the sides.

5. I find that to become eligible for credit, the goods should first be mentioned in the Table to the Rule 57Q(1). I find that in the present case, only the parts of air-conditioning appliances and machinery are mentioned and not the air-conditioner as such. Therefore, the Credit cannot be allowed are Air-conditioner as such.

6. Therefore, the order of the Commissioner (Appeals) is set aside allowing the credit on the Air-conditioner.

7. I also find that Shri Bipin Garg, Advocate pleaded that since it was a matter of interpretation and they had no intention to evade the payment of duty, the penalty imposed on the respondents may not be sustainable if the order of the Commissioner (Appeals) is set aside. I agree with the pleading of Shri Bipin Garg, Ld. Advocate and find that the penalty is not sustainable in this case. Ordered accordingly.

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