TMI Blog1997 (11) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 1994 and on which basis they took credit of the duty paid on various capital goods received by them in their factory from time to time and used the same for producing or processing or for bringing about any change in any substance for the manufacture of the final products. On 29-6-1995, a show cause notice was issued to them proposing denial of credit of Rs. 64,80,751/- under Rule 57U on the ground that the various items mentioned in the annexure to the notice did not qualify as capital goods within the meaning ascribed thereto in Explanation 1 to Rule 57Q and in respect of certain items, the show cause notice also proposed to deny credit on the ground that the declaration was not filed or documents on the strength of which credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter milling. The prepared cane goes to the mill for juice extraction and by application of pressure and squeezing device in the mill, the juice is extracted from cane. The remaining residue is called bagasse. The juice extracted from 3 or 4 mills is mixed together and screened for removal of fine bagasse particles and the mixed juice is weighed and pumped to the boiling house for further processing. Bagasse is sent to boiler house through belt conveyors and is used as fuel. The mixed juice after weighment is pumped to the boiler house where it is heated to 70oC in juice heaters. Clear juice overflows from the top and is pumped to the evaporators. Muddy juice is filtered through rotary vacuum filters. Clear juice is concentrated to 60% soli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, they are essential for the purpose of manufacture of final products in a marketable condition. The reason for denial of credit on these items is that they are not directly used in or in relation to the manufacture of the final products. However, since they are essential for the purpose of manufacture of the final products in a marketable condition, they are to be held as falling within Clause (a) of the Explanation 1 to Rule 57Q and entitled to credit thereunder. In fact, the Assistant Collector himself in para 13 of his order has extended credit to process control equipment and, applying the same analogy, measuring and checking instruments would also be covered by the definition of capital goods, as held by the Tribunal in several c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (b) of the explanation. 4.4 Pipe Fittings and Flanges : These are used to carry the sugar cane juice/syrup to various vessels for processing of sugar. These pipe fittings are in the nature of material handling equipment which have been held to be capital goods under Rule 57Q. Therefore, credit is available on these items. Pump with Wire Frames : Pumps with Wire Frames which are instrumental in moving sugar cane juice mascuits and molasses from one station to another in the plant for production of sugar are also in the nature of material handling equipment and hence entitled to credit as capital goods. Credit on these two items has been denied for the reason that it was taken against original invoice and not against duplicate invoice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssory of generator/ACB and since the alternator/ACB is covered by Clause (a) of the explanation 1 to Rule 57Q, space heater would be covered by Clause (b) thereof. 4.7 Spares for butterfly valve : Credit is not available on this item since it has not been declared and the declaration dated 20-6-1994 only shows gate valves which has not been established to be identical to butterfly valve. 4.8 Thermic Bearing Metal : This is required for babbitting of Mills Bearings which are integral parts of mill crushers. Credit has been denied on the ground that this is in the nature of welding equipment. The appellants do not dispute this finding but contend that since the item is in the nature of a component part/accessory, credit should be extended ..... X X X X Extracts X X X X X X X X Extracts X X X X
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