TMI Blog2006 (12) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... er decision of the Larger Bench in Jaypee Rewa [ 2003 (3) TMI 145 - CEGAT, NEW DELHI] needed to be reconsidered and revised, in view of the decision of the Hon ble Supreme Court in Lala Shri Bhagwan and another v. Ram Chand and another [ 1965 (3) TMI 72 - SUPREME COURT] , in which it was held that: It is hardly necessary to emphasise that consideration of judicial propriety and decorum require that if a learned single Judge hearing a matter is inclined to take the view that the earlier decision of the High Court whether of a Division Bench or of a single Judge, needs to be re-considered, he should not embark upon that enquiry sitting as a single Judge, but should refer the matter to a Division Bench or, in a proper case, place the relevant papers before the Chief Justice to enable him to constitute a Larger Bench to examine the question. That is the proper and traditional way to deal with such matters and it is founded on healthy principles of judicial decorum and propriety. It is to be regretted that the learned Single Judge departed from this traditional way in the present case and chose to examine the question himself. Faulty attitudes in a decision-making process can dest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alleged in the show cause notice that the said oxygen and acetylene gases, falling under chapter sub-headings 2804.19 and 2901.10 respectively of the Excise Tariff Act, were used in repairing of their plant and not in relation to manufacture of cement or clinker. According to the Revenue, such use was not covered under the definition of inputs under Rule 2(g) of the said rules. Recovery of the said credit wrongly taken with imposition of penalty and charging of interest was proposed in the show cause notices. 4. The Deputy Commissioner on the basis of the material on record held that these gases were used in relation to repairing of capital goods as was clearly admitted by the assessee itself in its reply and not in relation to the manufacture of their final product. Therefore, no Cenvat credit was admissible on these items. It was observed that these gases would be eligible for Cenvat credit only in cases where they are used as inputs for manufacturing new capital goods. The adjudicating authority, therefore, ordered recovery of the Cenvat credit wrongly availed with interest and imposed penalties. 5. These orders were appealed against before the Commissioner (Appeals) who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wa Plant (supra) was overruled in view of the later decision of the division bench of the Tribunal in India Sugars and Refineries Ltd. v. CCE, Bangalore reported in 2006 (205) E.L.T. 717 (T) = 2006 (74) RLT 61 (CESTAT Bangalore), in which the division bench observed in paragraph 4 that the Larger Bench had not taken into consideration the decision of the earlier Larger Bench in Modi Rubber Ltd., 2000 (119) E.L.T. 197 (Tri.-LB) rendered in the context of the lubricant oil. It was held that the Larger Bench in Jaypee Rewa Plant should have adopted the reasoning of the earlier Larger Bench. It was submitted that the division bench had categorically held that the ruling in Jaypee Rewa Plant was not a good law and, therefore, the Larger Bench judgment in Jaypee Rewa Plant cannot be followed. He also submitted that the case of the same appellant in respect of electrodes has been remanded. The learned Counsel also relied upon the decision of the Rajasthan High Court in Excise reference No. 9/2002 decided on 8-8-2003 by which the division bench of the Hon ble Rajasthan High Court holding that no question of law arose in that matter, declined the reference. In the process, the Hon ble High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of the final product by the appellant. The claim was made by the appellant in respect of these goods for their use only as an input and not as capital goods. She submitted that accessories were capital goods and were not used in the manufacture of the final product. It was argued that gases were not used for manufacture of welding machines because no welding machines were manufactured by the appellant and therefore, they cannot be considered to be input even within the meaning of explanation 2 to Rule 2(g) of the Cenvat Rules. She further contended that the Larger Bench decision in Jaypee Rewa Plant (supra) which concluded the issue in favour of the revenue could not have been overruled by the division bench, as was sought to be done in Indian Sugars and Refineries Ltd., (supra). It was submitted that the division bench did not refer the matter to a still Larger Bench and itself proceeded to declare the Larger Bench decision as overruled which was against the law of binding precedents. It was contended that the decision in Jaypee Rewa Plant was rendered on 10-3-2003, while the decision in Modi Rubber Ltd., (supra) was given on 19-5-2000 and the Punjab and Haryana High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riveni Engg. Industries Ltd. v. Commissioner of C.Ex., Meerut reported in 2005 (186) E.L.T. 158 (Tri.-LB), was cited for pointing out that welding electrodes used in maintenance of capital goods were held to be not entitled for benefit of Modvat credit, as goods used for maintenance were not covered under Rule 57Q of the Rules of 1944. (iv) The decision of the Hon ble Supreme Court in Tecumesh Products India Limited v. CCE, Hyderabad reported in 2004 (167) E.L.T. 498 (S.C.), was cited for the proposition that the repair/recondition or remake in the process of repairs would not amount to manufacture. (v) The decision of the Tribunal in U.P. State Sugar Corporation Limited v. CCE, Meerut reported in 2006 (110) ECC 88, was cited for the proposition that use of welding electrodes and gases for repairs and maintenance of plant and machinery was not eligible for Modvat credit as input. (vi) The decision of five Members Bench in CCE, Indore v. Surya Roshni Ltd. reported in 2001 (128) E.L.T. 293, was cited for the proposition emanating from paragraph 13 of the judgment that the goods which are claimed as inputs cannot get Modvat credit as capital goods. (vii) Reliance wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation 2, on which heavy reliance has been placed on behalf of the appellant, inputs would include goods used in the manufacture of capital goods which are further used in the factory of the manufacture. This expression, therefore, clearly postulates manufacture of capital goods for qualifying the goods used in such manufacture of capital goods which are further used in the factory, to be inputs . In the present case, it was tried to be argued that these gases were used as accessories of the welding machines and, therefore, they were inputs. This is a very laboured and farfetched contention, for the simple reason that explanation 2 contemplates manufacture of capital goods which are further used in the factory of manufacturer. It is nobody s case that the appellant manufactured welding machines and these goods namely, gases, were used in the manufacture of such welding machines which are capital goods. The said explanation 2 has absolutely no application where there is no manufacture of capital goods which are further used in the factory of the manufacturer. Gases used for maintenance and repairs of the plant in welding operations cannot be said to be goods used in the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als into finished goods would be held to have been used in the manufacture of goods. It was further held that repairs and maintenance of machinery were not normally done when the process of manufacture of goods with such machinery is underway. They are not a part of, or integrally connected with, the process of manufacture of final products. It was in terms held that, welding electrodes and gases used by the appellants for repairs and maintenance of machinery cannot be considered to have been used in relation to the manufacture of final products as they were not used co-extensively with the process of manufacture of cement/clinker and hence not integrally connected with the manufacture. The Tribunal, therefore, held that; the welding electrodes and gases used for repairs and maintenance of machinery in the appellants factory were not eligible inputs for Cenvat credit . 11. The above decision of the Larger Bench of this Tribunal squarely applies to the facts of this case and this Single Member Bench is bound to follow the said decision. Even a Division Bench would be bound to follow the same. This decision had become final and does not appear to have been challenged by either si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on/manufacture of capital goods for captive consumption is not eligible for the benefit of Modvat credit . The aforesaid reading by the Division Bench, of the judgment of the Larger Bench in Jaypee Rewa Plant, with respect, is mistaken because the argument of the party in their reply has been taken as if it was a finding of the Tribunal. This is clear from paragraph 5 of the decision in Jaypee Rewa Plant (supra) in which it was held as under :- 5. The party had, in their reply, submitted that a major part of the welding electrodes and gases had been used in the fabrication/manufacture of capital goods for captive consumption and the rest for repairs and maintenance of plant and machinery. Capital goods manufactured within the factory for captive consumption was exempt from payment of duty as per Notification No. 67/95-CE dated 16-3-95. It was contended that, under the Cenvat Scheme, it was permissible to take credit on inputs used in the manufacture of capital goods for captive use, as under the Modvat Scheme. Learned Commissioner rejected this plea on valid grounds. He found that the party had not shown that they had filed the necessary declaration under Rule 173B for the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Union Carbide India Ltd. v. CCE - 1996 (86) E.L.T. 613 (T) and the Larger Bench judgment in CCE, Meerut-I v. Modi Rubber Ltd. - 2000 (119) E.L.T. 197 (Tri-LB), having been rendered in the light of the Apex Court judgment and the definition of term input , the ratio of these rulings clearly overrules the Larger Bench judgment of Jaypee Rewa Plant . The Division Bench held that the inputs of Welding Electrodes, Oxygen Gas and Acetylene Gas used for welding the punctured pipes carrying the hot sugar juice should be treated as part of process of manufacture and hence they were eligible inputs for the manufacture of the final product. It will be seen that the division bench rendered its judgment in the context of a very different set of facts where the pipes in which sugar juice was carried were being repaired by use of these gases in a welding process. The decision in Union Carbide India Ltd. supra) was rendered on 14-6-96 and the decision in Modi Rubber Ltd., was rendered on 19-5-2000. Therefore, they could not have overruled the subsequent decision of the larger bench in Jaypee Rewa Plant rendered on 10-3-2003. 11.4 The Division Bench placed heavy reliance on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would not be open for this Single Member Bench to question the correctness of the decision of the Larger Bench the ratio of which, with respect, appears to be sound, besides being binding on the single Member, and to prefer a contrary decision of the Division Bench in India Sugars and Refineries Limited. In fact, there can be no question of any conflict between the decision of the Larger Bench and a contrary decision of the Division Bench and obviously the Larger Bench decision will prevail because it was never sent for reconsideration of its ratio by a still Larger Bench. Therefore, judicial discipline demands that this single Member Bench must follow the Larger Bench decision which is neither expressly nor impliedly overruled by any decision of a higher forum. 13. It may be recalled that the Hon ble Supreme Court of India in Tribhovandas Purshottamdas Thakkar v. Ratilal Motilal Patel and Others reported in AIR 1968 S.C. 372, while dealing with the situation where the learned Single Judge of the High Court held that even though there is a judgment of Single Judge of the High Court of which he is a Member or of a Division Bench of that High Court he is not bound to follow tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorum and propriety. It is to be regretted that the learned Single Judge departed from this traditional way in the present case and chose to examine the question himself. 15. Faulty attitudes in a decision-making process can destroy the institutions. Decisions can be corrected only by the superior forums or on review, but when attitudes become faulty the very basis of judicial institutions would get shaken, leading to utter chaos and confusion. Therefore, this court is bound to follow the Larger Bench decision in preference to the decision of the Division Bench, which could not have declared a Larger Bench decision as overruled. Only a Bench larger than the said Larger Bench deciding Jaypee Rewa Plant (supra) could have declared that decision to have been either expressly or impliedly overruled by a decision of a higher forum, or itself overruled it. Therefore, none of the contentions raised on behalf of the appellant warrant any interference with the impugned order of the Commissioner (Appeals), which has rightly followed the decision of the Larger Bench in Jaypee Rewa Plant (supra), in disallowing the Cenvat credit to the appellants in respect of use of oxygen gas and acetyle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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