1998 (10) TMI 160 - AT - Central Excise

Summary

Issues:
1. Whether storage tanks for storing Hydrofluoric Acid are considered capital goods under Rule 57Q of the Central Excise Rules.

Analysis:
1. Argument for Appellants:
The appellants argued that storage tanks for Hydrofluoric Acid are essential for their manufacturing process as the acid is highly corrosive and needs specific storage conditions. They cited the Hawley's Condensed Chemical Dictionary to support the corrosive nature of the acid. Referring to previous judgments, they claimed that similar storage equipment had been considered capital goods by the Appellate Tribunal in other cases. They argued that the term "capital goods" should encompass equipment necessary for manufacturing processes, even if not explicitly defined in the Central Excise Rules. They also relied on decisions from other Acts to support their interpretation.

2. Counter-argument by Respondent:
The respondent contended that the definition of capital goods in Rule 57Q is not inclusive, unlike in the Income Tax Act. They argued that the term "plant" in the definition does not cover tanks according to the rule of interpretation "ejusdem generis." They emphasized the distinction between process and processing, stating that storage tanks do not alter the stored goods. They referenced a court decision to support their argument that the term "plant" should not be broadly interpreted to include tanks.

3. Rebuttal by Appellants:
The appellants reiterated that the Appellate Tribunal had consistently interpreted capital goods broadly to include equipment necessary for manufacturing processes. They argued that the term "processing" in the definition of capital goods should encompass all items aiding in the manufacture of finished goods. They referred to a Supreme Court judgment where an effluent plant was considered part of a manufacturing plant to support their stance.

4. Judgment:
The judge considered both arguments and previous case law. It was noted that the Appellate Tribunal had previously allowed capital goods credit for similar storage equipment in other cases. The judge found that the storage tanks for Hydrofluoric Acid were crucial for the manufacturing process, similar to other cases where such equipment was deemed capital goods. Drawing on precedents, including the allowance of capital goods credit for cylinders in a previous case, the judge concluded that the storage tanks fell within the definition of capital goods. Therefore, the appellants were deemed eligible to avail of capital goods credit, and the appeal was allowed.