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TMI Blog2002 (1) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect, or not. For the reasons discussed below, I am deciding the main appeal itself. 4. In the grounds of appeal, the appellants inter alia contended that all the impugned items are essential for the manufacture of the final products. They also filed a note indicating the nature of function of each item. They relied on a number of case laws. 5. Let me take up the items one by one :- (a) Diapharm Viton Base : (Rs. 27/-) The appellants contend that in polysius kiln, coal is used as fuel for burning the raw material; for better utilisation of coal, the burning coal gas has to be analysed constantly which is done with the help of gas analyser (measuring equipment) and the diapharm is part of the gas analyser and therefore eligible for capital goods credit. (b) Seamless Steel Tubes : (Rs. 2842/-) The appellants submit that in the coal mill, coal lumps are crushed into powder to plug the escaping coal dust they are using the bag filter to collect the coal dust and recycled the same for burning purposes. The pipes used in this process are part of bag filter system of the coal mill and therefore eligible for capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d genset. The Assistant Commissioner denied the credit since the capacity of the genset was not indicated. The appellants plead that their genset is 2500 KVA capacity and therefore credit should be extended to this item. 6. They have also cited the case laws in the case of Century Cements Ltd. reported in 1997 (95) E.L.T. 655, Grasim Cements - 1997 (96) E.L.T. 354 (T), Modi Alkalies & Chemicals - 1996 (88) E.L.T. 555 and few others. 7. From the above analysis, I find that all the above items are essentially involved either in the preparation of raw material or at an intermediate stage or one connected with pollution control and so they can be said to be used in or in relation to the manufacture of the final products, namely, cement and each of the above items has an individual distinct role to play in the manufacturing activity. The cited case laws are also in their favour. Therefore, they are eligible for the capital goods Modvat credit. 8. In the light of the above discussions, that part of the impugned order disallowing capital goods Modvat credit is set aside and the appeal is allowed with consequential benefits. In the grounds of appeal, the Revenue has mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of the submissions, I notice that the only ground raised by the Revenue in these appeals is that all these items are not used in the manufacturing activity and are only used for the purpose of conveying, connecting or disconnecting the electricity which is not production activity and are not eligible for the benefit of Modvat credit as capital goods. We find that the Hon'ble Supreme Court in a batch of appeals after due consideration held that wires and cables are capital goods and found that the language used in the Rule is very liberal to determine whether a particular item qualifies as capital goods or not as this is already built in the definition and the Hon'ble Apex Court has held that the stand taken by the department that these items cannot be considered as not used for manufacture of final product cannot be accepted and the Revenue appeals have been dismissed. The findings of the Apex Court are reproduced below : "In this batch of appeals the only point in issue is regarding availing of Modvat credit in respect of certain items by the manufacturers treating those items as 'Capital goods' in terms of Rule 57Q of the Central Excise Rules, 1944. The controversy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dies, generating sets and weigh-bridges used in the factory of the manufacturer. (1) 'specified duty' means duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975). (2) Notwithstanding anything contained in sub-rule (1), no credit of the specified duty paid on capital goods shall be allowed if such duty has been paid on such capital goods before the 1st day of March, 1994." 3. The Tribunal by the impugned judgment and order dated 13th April, 1999, considered various items which were involved in different appeals and by a common judgment and order decided the controversy in favour of the manufacturers rejecting the stand of the Revenue that those are not 'Capital goods' within the meaning of Explanation (1)(a) defining 'Capital goods'. Some of the items considered by the Tribunal are: power cables and capacitors in case of Jawahar Mills Ltd.; control panels, cables distribution boards, switches and starters and air compressors in the case of Indian Refrigeration Co. Ltd.; electric wires and cables in the case of Kothari Sugar and Vijay Chemicals. The Tribunal on consideration of the aforesaid provision and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption notification, it was held that there was no good reason why the exemption should be limited to the raw naphtha used for producing urea that is utilized directly in the urea plant since the notification only required that the ammonia should be used in the manufacture of fertilizers and not that it should be used directly in the manufacture of fertilizers. The Court said that : "The exemption notification must be so construed as to give due weight to the liberal language it uses. The ammonia used in the water treatment, steam generation and inert gas generation plants, which are a necessary part of the process of manufacturing urea, must, therefore, be held to be used in the manufacture of ammonia and the raw naphtha used for the manufacture thereof is entitled to the duty exemption." 6. The contention of learned Additional Solicitor General that the aforesaid decision and other decisions referred by the Tribunal in the impugned order were cases involving sales tax and income tax and, therefore, the Tribunal should not have relied on those decisions is without any substance because the real question is that of the principle laid down by a decision. In view of the libera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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