TMI Blog2003 (1) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of Rule 57T of the Central Excise Rules, 1944 and were availing benefit of Modvat credit on various capital goods used for producing or processing of the final product in their factory. 3. The appellants were issued with a show cause notice dated 20-5-96 and an Addendum to the show cause notice dated 18-8-97 proposing to disallow Modvat credit under Rule 57Q of duty paid on capital goods on grounds that :- (i) the capital goods were not used in the manufacture of iron and steel products but were used in the thermal power plant for generation of electricity; (ii) the capital goods did not satisfy the definition of capital goods; that declarations under Rule 57T were not filed in respect of certain capital goods; (iii) in respect of certain goods declarations were filed after three months; and in respect of certain goods even though declarations were filed within three months, no application was made for condonation of delay; (iv) The show cause notice invoked longer period of limitation on the ground that the appellants had willfully misstated and suppressed the fact of utilization of the capital goods in generation of power; 4. After hearing both si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Paras 5.3 to 5.8 and para 6.1 of the order) 8. 1 2500 ASSV 1,37,295 9. 200/1500/GVBW 29,860 10. 250/1500/GVBW 4,23,813 11. 8 1500 GVBW 29,860 12. 8 600 GVBW 2,94,570 13. Valves 89,810 14. SVSW etc. 73,890 15. Black Dia Pipe 15,603 TOTAL 98,45,330 16. Capital goods used in generation of power 21,13,308 TOTAL 1,19,58,638 C. MATERIAL HANDLING EQUIPMENT AND CONNECTED ITEMS Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Fork Lift Trucks 1,20,458 (1) The items are in the nature of material handling equipments which do not have direct participation in the manufacturing process of the finished goods. (Page 8 of the order) 2. Rotating Fork 26,500 3. Tyres 68,518 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the Commissioner for disallowance of credit 1. Bridge rectifier 345 These items are capable of being used in different units of the plant but since these were identified in the show cause notice as materials procured for setting up power project, such goods have no direct participation in the manufacture stream of the final product. 2. HRC Fuses/Fuse links 31,147 3. 250 V Lamp 9,973 4. Starter 20,390 5. Terminal end 4,415 TOTAL 66,260 (b) As regards the following items :- F. ELECTRODES, WELDING POWDER, WELDING SPOOLS ETC. Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Electrode 30,000 Definition of capital goods is restrictive as held by the Tribunal in the case of Shanmugha Raja v. CCE - 1997 (89) E.L.T. 84 CCE v. Ferro Alloys Corpn. Ltd. - 1997 (70) ECR 841; the goods in question are used for fabrication and maintenance of capital goods which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter 3,375 TOTAL 66,260 (d) The credit on the following items would be eligible only if they are used in the power project for which the matter requires to be factually analysed. J. SPARES OF CONVERTERS Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit 1. Bridge rectifier 345 These items are capable of being used in different units of the plant but since these were identified in the show cause notice as materials procured for setting up power project, such goods have no direct participation in the manufacture stream of the final product. 2. HRC Fuses/Fuse links 31,147 3. 250 V Lamp 9,973 4. Starter 20,390 5. Terminal end 4,415 TOTAL 66,260 (e) As regards the following items: - K. COMPUTER WATER TREATMENT CHEMICAL Sl. No. Description of goods Amount of credit Disallowed (Rs.) Findings of the Commissioner for disallowance of credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts so re-determined is entitled or not. (i) The appellants, have contested that the longer period of limitation was not invocable for the following grounds :- (i) The issue as to whether a particular item would be eligible for Modvat credit as capital goods or not is a matter of legal interpretation and therefore an assessee claiming Modvat Credit cannot be said to have indulged in any mis-declaration or mis-statement of facts warranting invocation of longer period of limitation. (ii) The fact that the Commissioner has himself allowed Modvat credit to the extent of Rs. 30,95,819/- out of the total demand of Rs. 2,27,74,056/- indicates that the dispute is in the nature of legal interpretation as to whether an item would be eligible for Modvat credit or not. In such a situation, longer period of limitation cannot be invoked. (iii) The jurisdictional Superintendent of Central Excise had issued show cause notices on the very same items proposing disallow Modvat credit on the ground that they were not eligible for Modvat credit. Thus, the eligibility of the items in question to capital goods credit was a subject matter of dispute between the Appellants and the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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