TMI Blog2010 (12) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of inputs with tariff sub-heading No. Amount of credit involved (Rs.) Details of use, area of application as declared by the appellant Grounds of disallowance of credit (1) (i) Sheets (7219.11) (ii) tubes (7305.90) (iii) Steel Wire Rope (7312.10) 13,60,043/- 6,60,683/- These are used for the manufacture of capital goods availing exemption under Notification No. 217/86. Credit is admissible as per provisions of Rule 57D(2) For Sl. No. 1 2 : Appellant have admitted that these goods were not used as input, in or in relation to the manufacture of their specified final product by virtue of their use, whereas Notfn. No. 217/86 specifically exclude capital goods . They have neither disclosed the particulars of any specific machine/machinery or any other capital goods said to be manufactured out of these goods. (2) (i) Non ST Billets/Blooms (7207.90) (ii) Billets (7224.00) (iii) MS Rounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using these goods thereby admitting that the goods involved were not used as inputs, in or in relation to the manufacture of specified final products of the assessee. As regards items at Sl. No. 2, assessee claimed to have used them in the forging shop to manufacture intermediate goods. The Commissioner found that the goods involved were used to manufacture forged products. These could not be termed as intermediate goods used in or in relation to manufacture of final products. These are intermediate capital goods. Rule 57D(2) was amended vide Notification No. I7/95-C.E. (N.T.), dated 18-5-1995 so as to include intermediate capital goods as defined under Rule 57Q. Appellant had failed to submit evidence indicating details of machine/machinery for which such components, spare parts and accessories (made from intermediate capital goods) were used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product. The expression used in various workshops in the manufacture of various capital goods was very ambiguous unless the name of machine/machineries and its function were specifically mentioned by the appellant. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial is sent through a process of agglomeration to form sinters. It is also used in the sinter and coal handling plant for screening the sinter and coal before charging in the furnaces. Therefore, they are parts of the sinter machine and coal handling machine. Thus these were eligible for credit as parts and components of machinery. Several case laws were cited wherein wire rods, etc., were specifically held to be capital goods. By a clerical error, credit was claimed initially under Rule 57A. However this could be allowed as per the decision of the Tribunal in the case of Ganga Kisan Sahkari Chini Mills Ltd. v. CCE, Meerut [1998 (104) E.L.T. 19 (T)]. (ii) Tubes/sheets : These goods were used in workshops of the factory in the manufacture of various capital goods. These capital goods are removed on payment of duty or under exemption under Notification No. 217/86. As per rule 57Q(1) these parts of machines were eligible for Modvat credit. Tubes were specifically included in capital goods under Rule 57Q. (iii) Non ST Billets/Blooms/Steel forgings/MS Rounds Flats/Billets : It is claimed that these goods were used in the workshops in the manufacture of various capital goods. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority to consider the claims of the appellants both in the context of inputs and capital goods. As regards the claim for credit of ₹ 36,400/- in respect of greases, the appellants case stood decided in its favour by the Larger Bench judgment of the Tribunal in the case of CCE v. Modi Rubber Ltd. [2000 (119) E.L.T. 197]. In that case, the Tribunal had allowed credit in respect of lubricating oils and greases used for the purpose of lubricating machines and machinery which were used in the manufacture of final products under the category of inputs. 5. As regards denial of Cenvat credit of ₹ 14,20,379/- taken based on extra copies of invoices, appellants submitted that the Commissioner (Appeals) had followed incorrect reasoning in the light of amendment to Rule 57G and Rule 57T vide notification No. 7/99-C.E. (N.T.), dated 9-2-1999 and also the Circular No. 441/7/99-CX., dated 23-2-1999 issued by the CBEC. 6. Paragraph 2 of the said Circular which reads as follows is particularly relied on : 2. The Assistant Commissioner, before issuing Show Cause Notice for wrong availment of Modvat credit by the assessee on any procedural grounds, shall conduct enquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d casting and copper coated wire and grate bar figuring at Sl. No. 3 of the table appearing at the beginning of this order. As regards credit of duty paid on grease (Sl. No. 4), we find that this aspect was considered by a Larger Bench of the Tribunal in the case of CCE, Meerut-I v. Modi Rubber Ltd. [2000 (119) E.L.T. 197 (Tri.-LB)] wherein it was held as follows : 15. It follows from the foregoing discussion that the question whether lubricants used for lubrication of machinery employed for the manufacture of finished products are inputs within the meaning of this term under Rule 57A requires to be answered in the affirmative by squarely following the ratio of the decision of this Tribunal in Union Carbide India Ltd. (supra). Accordingly, we hold that the lubricants in question were used in or in relation to the manufacture of paper products and the same qualified to be inputs for the purpose of Modvat credit under Rule 57A during the relevant period. Following the above decision, we allow credit relatable to grease, received by the appellants during the material period. 9.1 As regards admissibility of credit on the other items (Sl. No. 1 2 of the table), we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r were parts of machines, machinery, plant, apparatus, tool or appliances used for producing or processing of any goods, they were obviously covered by the definition of capital goods in clause (a) to Explanation (1) below Rule 57Q which were eligible for credit under Rule 57Q. In Gujarat Ambuja Cement Ltd. (supra) the Himachal Pradesh High Court held that plates/rounds, TOR steel, channels, angles, sheets, industrial cables, fuses, plugs, sockets, electric machinery used in hydraulic system motor pumps/electric motor by their use were covered by the definition of the capital goods. In Hindustan Zinc Ltd. (supra) the Rajasthan High Court held that where any particular process is integrally connected with the process of manufacturing the final product and without which manufacturing could not be viable, then the goods used in such process would be covered for credit purpose. In Aditya Cement case (supra) the Rajasthan High Court while setting aside the order of the Tribunal in that regard in Aditya case (supra) held that iron and steel ingots used as parts and components and its machinery used in manufacturing cement, railway track materials needed for transporting fuel, are essenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details viz. description of the goods, assessable value, name and address of the factory or warehouse where the goods are to be received, and if the assessee has filed a declaration as contemplated in the Modvat rules, the Assistant Commissioner having jurisdiction over the factory would allow the credit of duty so paid after making enquiries as above. 3. It should hereafter be ensured that Show Cause Notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries. Wherever the Assistant Commissioner, after making due enquiry, is satisfied that the Modvat credit taken by the assessee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed toward reduction of litigation. 4. All pending cases may be disposed of accordingly. 5. Trade and field formations may be suitably informed. We note that the Circular clarified that the notification was issued long after the material period. Therefore, the assessee cannot claim the benefit of notification or the Circular. In any case, the Circular does not cover cases of the type in question. 10. We find that in CCE, Meerut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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