TMI Blog1996 (5) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital goods has been redefined to include machinery, machines etc. used in or in relation to the manufacture of final product. I observe that the above expression has a wider connotation than the expression `used in production or to bring about any change in any substance in the manufacture of final product and therefore as held by the Supreme Court Fork Lift being used in the transfer of raw material from one place to another can be regarded as taking a part in relation to the manufacture of final product, entitled to input credit. 2. The Revenue has urged as under in the grounds of appeal : Collector (Appeals) has observed that with effect from 20-5-1994, all capital goods used in or in relation to the manufacture of final products are covered by Rule 57Q read with Rule 57S in view of amendment of Rule 57S by Notification No. 23/94-C.E. (N.T.), dated 20-5-1994. This observation is not correct as the said amendment relates only to Rule 57S and there has been no change with respect to scope of Modvat benefit under Rule 57Q, nor has the definition of goods undergone any change under Rule 57Q. It is evident from the definition of capital goods under Rule 57Q, in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the goods or processing of the inputs or bring about any change in the inputs for the manufacture of the final finished products. In this background therefore there is no scope for enlarging the definition of capital goods to include within its ambit the Fork Lifts also. He has pleaded that the definition should be read on its own terms context of Rule 57Q and the wordings of Rule 57S cannot be read with Rule 57Q to hold that the use of the capital goods should be in or in relation to the manufacture of the notified finished product. 3. The learned Consultant for the respondents has pleaded that the learned lower authority had taken note of the judgment of the Hon ble Supreme Court where a similar issue as to what constitutes process in the context of manufacture of sodium sulphate was before the Hon ble Supreme Court. The issue involved in that case was in the context of use of pump for lifting the brine solution and the Hon ble Supreme Court after analysing, the process of manufacture of sodium sulphate has observed that without lifting the brine solution the manufacture of the end-product i.e. sodium sulphate was not feasible and have held that the term `processing shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacturing process. It precedes the feeding of the mixture into the kiln where the burning takes place. The whole process is an integrated one consisting of the lifting of the raw materials to the platform mixing coke and lime and then feeding into the kiln and burning. These operations are so interrelated that without anyone of these operations manufacturing process is impossible to be completed. Therefore, if power is used in any one of these operations or any one of the operations is carried on with the aid of power, it is a case where in or in relation to the manufacture the process is carried on with the aid of power. 21. Thus processing may be an intermediate stage in manufacture and until some change has taken place and the commodity retains a continuing substantial identity through the processing stage, we cannot say that it has been manufactured. That does not, however, mean that any operation in the course of such process is not in relation to the manufacture. While interpreting the same exemption notification in Standard Fireworks Industries v. Collector -1987 (28) E.L.T. 56 (SC), it was held that manufacture of fireworks requires cutting of steel wires and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods under Rule 57Q : Provided further that where the capital goods are removed after being used in or in relation to manufacture of final products from the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 per cent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit, except where such capital goods are sold as waste and scrap, the duty leviable shall be at the rate applicable on such waste and scrap. (2) Credit of the specified duty allowed in respect of any capital goods may be utilised towards payment of duty of excise, - (i) on any of the final products manufactured in the factory of the manufacturer; or (ii) on the waste, if any, arising in the course of manufacture of the final products; or (iii) on the capital goods themselves if such capital goods are removed under sub-rule (1). (3) No part of the credit of duty allowed, shall be utilised save as provided in sub-rule (2) or, shall be refunded in cash or by cheque. (4) On an application made by a manufacturer, the Collector ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that handling would also be a process in the context of notified finished products in case it could be shown that without the function of handling the final product could not be manufactured. What is therefore to be seen is whether the equipment which is brought in as such that without the use of which for handling purpose the final product cannot be manufactured in the appellants factory. In that event the benefit of Modvat credit in respect of that equipment has to be allowed. In the present case the goods involved are Fork Lifts which are used for lifting. The respondents it has been pleaded are manufacturing iron forgings of various sizes weighing as much as one tonne or so and unless these are lifted and the materials out of which the same has been manufactured are transported, the manufacturing process is not possible. We observe that the respondents case in the light of the plea made will have to be considered in the light of the judgment of the Hon ble Supreme Court referred to supra. The plea of the Revenue is that the definition of capital goods as set out under Rule 57Q should not be read with the wordings of Rule 57S. We observe that the Modvat Scheme is an integrated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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