2005 (98) ECC 170 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri Jeet Ram Kait, Member (T)

Perambalur Sugar Mills Ltd.

Versus

Commissioner of Central Excise, Trichy

E/PD/29/2004 and Appeal No. E/59/2004/Md.

[Arising out of Order-in-Appeal No. 482/2003 (SCN) TRY-II dated 10.10.2003 passed by the Commissioner of Central Excise (Appeals), Trichy]

Stay Order No. 396/2004
Final Order No. 580/2004, dt. 19.7.2004, Certified on 27.7.2004

Modvat Credit

Plain plates -- eligibility -- Words & Phrases -- Rule 57Q -- Interpretation -- Eligibility -- capital goods -- The language used in the Explanation (1) to Rule 57Q is very liberal and that if any of the items enumerated in Explanation 1(a) and 1(b) is used for any purposes mentioned therein for the manufacture of final products, it would satisfy the test of capital goods.

Modvat Credit

Capital goods -- Plain plates -- Eligibility -- Modvat Credit cannot be denied to the item, plain plates (MS plates), used as spares, for the purpose of maintenance of Boiler etc -- Rule 57Q of Erstwhile Central Excise Act, 1944.

Appeal allowed

PRESENT :

Shri Masilamoney, Con, for the appellant.

Shri A. Jayachandran, JDR for the respondent.

Cases Cited :

1. CCE, Allahabad v. UP State Yarn Co. Ltd., 2000 (120) ELT 747........................ [Para 4]

2. Jawahar Mills v. UOI, 2001 (77) ECC 1 (SC)..................................................... [Para 6]

3. JK Cement Works v. CCE, Jaipur, 2000 (116) ELT 52................................. [Paras 4, 6]

4. Simbhaoli Sugar Mills Ltd. v. CCE, 2001 (135) ELT 1239.................................. [Para 6]

5. Vivek Alloys Ltd. v. CCE, Trichy, 1998 (104) ELT 541................................. [Paras 5, 6]

Per : Jeet Ram Kait (Oral)

For the purpose of hearing this appeal, the appellants are required to pre-deposit duty amount of Rs. 14,530. Since the issue to be decided falls in a short compass, I take up the appeal itself for decision by granting waiver of pre-deposit of the amount involved.

2. This appeal is filed by M/s. Perambalur Sugar Mills Ltd., the appellants herein challenging the Order-in-Appeal No. 482/2003(SCN) TRY-II dated 10.10.2003 passed by the Commissioner of Central Excise (Appeals) Trichy), by which the Commissioner has rejected the benefit of Modvat Credit on plain plates used as spares for boiler etc. on the ground that the impugned goods are not used in the manufacture but in the maintenance of capital goods and hence the goods cannot be treated as capital goods.

3. Brief facts of the case are that the appellants are manufacturers of sugar. They availed Modvat/Cenvat Credit on inputs and capital goods as per eligibility. During the period from July 2000 to October 2000 they had received MS Plates falling under Chapter 7208.11 and cut them into required sizes and utilized the same as spares for boilers, Sulphur burner etc. falling under heading Nos. 84 & 85. The benefit of Modvat Credit was allowed by the Assistant Commissioner vide Order-in-Original No. 105/2001 dated 27.11.2001. On review of the order by the Commissioner of Central Excise, Trichy, he has directed the Assistant Commissioner to file appeal before the Commissioner (Appeals), on the ground that MS plates used as spares do not fall under any of the eligible chapter headings, for the purpose of allowing the benefit of Modvat Credit. The Commissioner (Appeals) by the impugned order decided the issue in favour of the department as noted above. The Appellants assail this decision of the Commissioner (Appeals).

4. Shri M. Masilamoney, learned Consultant for the appellants at the outset submitted that identical issue is decided in favour of the assessee by the decision of the Tribunal in the case of JK Cement Works v. CCE, Jaipur, 2000 (116) ELT 52 wherein it was held that plain plates used for repairing the worn out/broken parts of the Kiln shall be eligible to Modvat/Cenvat credit. He has also invited my attention to the order of the Tribunal in the case of CCE, Allahabad v. UP State Yarn Co. Ltd., 2000 (120) ELT 747 wherein it is held that in a case where the assessee has declared the input and has given all the particulars, whether the credit was taken in RG 23C meant for capital goods or in RG 23A meant for inputs, benefit of credit cannot be denied. He, therefore, prayed for allowing the appeal.

5. Shri A. Jayachandran, learned JDR appearing for the Revenue on the other hand submitted that the Commissioner (Appeals) has rejected the benefit rightly by following the decision of the Tribunal in the case of Vivek Alloys Ltd. v. CCE, Trichy, 1998 (104) ELT 541 wherein it was clearly held that plain plates are not eligible for the benefit of Modvat Credit as capital goods under Rule 57Q and he prayed for rejection of the appeal.

6. I have considered the submissions of both the sides. I note the decision of the Tribunal in the case of JK Cement Works v. CCE, Jaipur (supra) squarely applies to the facts of the present case. In that case the Tribunal has clearly held that plain plates used for repairing the worn-out/broken parts of the kiln shell are eligible to the benefit of Modvat Credit under Rule 57Q. In the present case, the plain plates after cutting to the required size are used as spares for maintenance of capital goods, required for the manufacture of the final product viz sugar. In the case of Vivek Alloys Ltd. v. CCE (supra) relied upon by the Revenue, plain sheets were used for maintenance work in workshop and not for maintenance of any capital goods. Therefore, the decision cited by the Revenue is distinguishable from the facts of the present case. Further the Tribunal in the case of Simbhaoli Sugar Mills Ltd. v. CCE, 2001 (135) ELT 1239 has held that items such as Joint, Channels, Angles, MS plates, HR plates and Chequered plates are eligible items for modvat credit as capital goods. This decision of the Tribunal was challenged by the Revenue before the Hon'ble Apex Court and the Apex Court has dismissed the Revenue appeal, as noted in the order in Appeal No. 32/2002-TRY (C.EX) (PNV) dated 29.4.2002 of the lower appellate authority in another case. Further, the Hon'ble Apex Court in their landmark judgment in the case of Jawahar Mills v. UOI, 2001 (77) ECC 1 (SC) : 2001 (132) ELT 3 (SC) while laying down the law regarding eligibility to Modvat Credit on capital goods has held that the language used in the Explanation (1) to Rule 57Q is very liberal and that if any of the items enumerated in Explanation 1 (a) and 1(b) is used for any purposes mentioned therein for the manufacture of final products, it would satisfy the test of capital goods. Therefore, following the ratio of the Tribunal decision in the case of JK Cement Works v. CCE (supra), Simbhaoli Sugar Mills Ltd. v. CCE (supra) and the Hon'ble Apex Court judgment in the case of Jawahar Mills v. UOI. (supra), I hold that Modvat Credit cannot be denied to item, plain plates (MS plates), used as spares, for the purpose of maintenance of Boiler etc. I, therefore, hold that the impugned order is not legal and proper and I set aside the same and allow the appeal with consequential relief, if any.

The operative portion of this order was pronounced in the open court on 19.7.2004

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