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TMI Blog2010 (8) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras Cements Ltd., Mathod, are the manufacturers of O.P. cement falling under Chapter 2502.00 of Central Excise Tariff Act, 1985 (hereinafter referred to as 'the Act' for short). On gathering intelligence that the assessee has taken CENVAT credit on ineligible items, the preventive unit of Davangere Division visited the unit on 14-2-2002 and verified the CENVAT documents. During such verification, it was observed that the assessee has taken CENVAT credit on electric bulbs and rubber strips, which are neither eligible capital goods as per Rule 2(b)(i) of the CENVAT Credit Rules, 2001 (hereinafter referred to as 'the Rules' for short) nor the spares/components/accessories of the capital goods as defined under Rule 2(b)(ii) of the Rules. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT is allowed to be taken on bulbs in terms of Rule 2(b)(ii) of the Rules. They further contend that the tariff classification is irrelevant and all components, spares and accessories are eligible for CENVAT credit as long as they are used in the factory for the manufacture of final product. It is further contended that, in so far as the rubber strips are concerned, again they are used in their plant to ensure safety against electric shocks. The strips are used wherever open and concealed wiring is available and the rubber strips are used to avoid any direct contact with the live wires and cables. Though the rubber strips do not directly participate in the manufacture of cement, but they are required to be used as an accessory of electrica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that contention of the assessee that the electric lights falling under Chapter 94.05 should be construed as 'Capital Goods' covered under Rule 2(b)(ii) of CENVAT Credit Rules as accessories to electric system. Therefore, it held that, both electric bulbs and rubber strips are eligible capital goods and CENVAT credit can be extended to them. Thus, it set aside the order of the adjudicating authority by allowing the appeal and granted the relief to the assessee. 4. Aggrieved by the said order, the Revenue preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. The Tribunal held that, as it has already held in the case of Malhar Cement v. CCE, Raipur, reported in 2000 (125) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001?" We have heard the learned advocates appearing on both sides and perused the records. 6. Chapter 85 deals with electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles. The Notes to the said Chapter sets out what are the items which are not covered under the said Chapter. It is not in dispute that the electric bulb is not one such item which is included. On the contrary, Item, (85.39 reads as under : "Chapter 85.39 : Electric filament or discharge lamps, including sealed beam lamp units and ultra-violet or infra-red lamps; Arc lamps - Vaccum and gas filled bulbs of retail sale price not exceeding Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under : "Chapter 94.05 : Lamps and lighting fittings including searchlights and spotlights and parts thereof, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included." 8. Therefore, it is clear from the aforesaid descriptions that the lamp and light fittings which are not illuminated with the help of electricity falls under Chapter 94 and lamps and light fittings illuminated by electricity falls under Chapter 85. Once the electric filament or discharge lamps fails within Chapter 85, they stand excluded from the application of Chapter 94. At this juncture, it is necessary to note the heading of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fetched argument. In the discussion earlier, we had held that an item or equipment even with remote association with production or process would qualify but an electrical lighting fittings would not meet that requirement. We uphold, the rejection of this claim by the Addl. Commissioner." 11. The aforesaid observation of the Tribunal runs counter to the law declared by the Apex Court in the case of J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Sales Tax Officer, Kanpur [1997 (91) E.L.T. 34 (S.C.)], wherein the Supreme Court has observed as under : "Para-12 : The expression "electricals" is somewhat vague. But in a factory manufacturing cotton and other textiles, certain electrical equipment in the present stage of development would be co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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