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2017 (8) TMI 1001 - HC - Central ExciseCENVAT / MODVAT credit - capital goods - “Single Point Mooring system” - Rule 57Q of the Central Excise Rules, 1944 - Held that: - It is an undisputed fact that part of the pipelines and SPM are integrally connected with the equipments and tanks within the factory through the pipelines and instrumentation. It is necessary to run the refinery of the size in question without installation of SPM used in connection with the import of crude by giant crude tankers. SPM and all connected and related items “ capital goods” used & usable. The Appellants, in the present case, is not claiming that items used in making those SPM system to manufacture it. The scheme is that SPM system and its integrated part which is on going mechanism supported by the spares and accessories. Therefore, the Supreme Court judgment in Saraswati Sugar Mills vs. Commissioner of Central Excise, Delhi III [2011 (8) TMI 4 - SUPREME COURT OF INDIA], cannot be extended to deny the claim of the Appellants. The case of M/s. Bharati Airtel Limited is also not applicable in the facts and circumstances of the case, as in the present case actual SPM system is in use and required to be used for specific purpose. This is keeping in mind, the nature of business and final product produced/processed after obtaining this raw material through SPM system. In Vikram Cements vs. CCE, [2006 (1) TMI 130 - SUPREME COURT OF INDIA], the Supreme Court has specifically held that explosives in the mines are used for manufacture of final products and hence modvat credit cannot be denied even though not used in the factory. The impugned order, therefore, based upon the overruled judgment required to be set aside on this ground also as this case goes to the root of reasoning given by the learned Authority while rejecting the claim of the Appellant. We are inclined to observe that the expression “used in the manufacture of goods” take within its ambit in integral process and equipments connected with its ultimate production of goods. The material, equipments, in question are integral part of the manufacturing process and hence falls within the ambit of “capital goods”. Merely because SPM system is not specifically within the factory, but it is outside the factory, still required to be treated as “capital goods” used for manufacturing of final products, in the facts and circumstances of the case. Appeal allowed - decided in favor of appellant.
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