TMI Blog2015 (5) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... , our attention was also drawn to Rule 57B(1)(vi) which allowed MODVAT credit on accessories on final products cleared alongwith such final products, value of which is included in the assessable value of final products. Learned counsel for appellant could not explain as to how 'Welding Electrodes' can be said to be used for manufacture of final products or accessories of final products, so as to bring within provisions. 'Capital goods' and 'inputs' as defined in Rule 2 of Rules, 2001, includes the same items, to which Rule 57A, 57B and 57Q were applicable. No substantial distinction, we have found so as to find that during the period when Rules, 2001 are applicable, "Welding Electrodes" stand included within the definition of 'capital goods' or 'inputs' as the case may be, so as to entitle for MODVAT credit - Decision in the case of M/s Upper Ganges Sugar & Industries Ltd. Vs. Commissioner Customs & Central Excise [2015 (5) TMI 569 - ALLAHABAD HIGH COURT] followed - Decided against assessee. - Central Excise Appeal No. - 39 of 2008 - - - Dated:- 14-5-2015 - Hon'ble Sudhir Agarwal And Hon'ble Shashi Kant,JJ. For the Appellant : Abhinav N. Trivedi, S. D. Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not in or in relation to manufacture of final products. 7. Appellant preferred further appeal before the Tribunal, but the same also was rejected sofar as benefit of MODVAT credit is concerned. However, in respect to penalty, Tribunal has set aside the same. 8. In the memo of appeal, appellant has framed seven substantial questions of law, but while admitting appeal on 10th April, 2008, this Court framed only one substantial question of law as under : (1) Whether the authorities were justified in disallowing Modvat Credit on welding electrodes used for the maintenance and repair of the machinery in the factory wherein the appellants are engaged in the manufacture of V.P. Sugar and Molasses? 9. In order to clarify the things further, with the consent of parties, we have added one more substantial question of law as under : (2) Whether Welding Electrodes would be entitled for MODVAT credit as 'capital goods' or 'input', as per rules applicable during relevant period? 10. Learned counsel for parties have addressed us on both the aforesaid substantial questions of law, which though, have been framed differently, but, substantially can be ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification in the Official Gazette, specifically in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereafter, in this section, referred to as the specified duty) paid on the goods used in the manufacture of the said final products (hereafter, in this section, referred to as the inputs). (2) The credit of specified duty allowed under sub-rule (1) shall be utilised towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the notification issued under sub-rule (1) and subject to the provisions of this section and the conditions and restrictions, if any, specified in the said notification. (3) The Central Government may also specify in the said notification the goods or classes of goods in respect of which the credit of specified duty may be restricted. (4) The credit of specified duty under this section shall be allowed on inputs used in the manufacture of final products as well as on inputs used in or in relation to the manufacture of the final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or not, namely :- (i) inputs which are manufactured and used within the factory of production; (ii) paints; (iii) inputs used as fuel; (iv) inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production; (v) packing materials and materials from which such packing materials are made provided the cost of such packing materials is included in the value of the final product; (vi) accessories of the final product cleared alongwith such final product, the value of which is included in the assessable value of the final product: [Explanation. - For the purposes of this sub-rule, it is hereby clarified that the term 'inputs' refers only to such inputs as may be specified in a notification issued under rule 57A.] (2) The manufacturer of the final products shall not be allowed to take credit of the duty paid on the following goods, namely :- (i) machines, machinery, equipment, apparatus, tools, appliances or capital goods as defined in rule 57Q (other than those used as component parts in the manufacture of final products), used for any purpose in the factory; (ii) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub heading No. 8481.10 of a kind used for referigerating and airconditioning appliances and machinery); 3 All goods falling under chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40; 4 All goods falling under heading Nos. 90.11 to 90.13, 90.16, 90.17, 90.22 (other than for medical use), 90.24 to 90.31 and 90.32 (other than of a kind used for refrigeration and airconditioning appliances and machinery; 5 Components, spares and accessories of the goods specified against S. Nos. 1 to 4 above; 6 Moulds and dies; 7 Refractories and refractory materials; 8 Tubes and pipes and fittings thereof, used in the factory; 9 Pollution control equipment; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow sub-rule (1)] and received in the factory on or after the 1st day of January, 1996, shall not be taken on a date prior to the date on which such capital goods are installed or, as the case may be, used for manufacturer or a person designated by him for this purpose. (8)Notwithstanding anything contained in sub-rule (7), a manufacturer intending to remove the capital goods from his factory for home consumption or for export, prior to their being installed or used, as the case may be, shall be allowed to take credit on the date on which such capital goods are so removed by him from his factory on payment of the appropriate duty of excise leviable thereon as provided in rule 57S. (emphasis added) 16. First we would consider the question whether 'Welding Electrodes' can be considered to be 'input', attracting MODVAT credit under Rule 57A and 57B of Rules, 1944. 17. It is admitted case of appellant that Welding Electrodes as such have nothing to do with manufacture of 'sugar' and 'molasses' and other products, but, same is used for the purpose of repair and maintenance of machines, worn out during the process of running of factory. If no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are clearly of the view that 'Welding Electrodes' would not come within the category 'inputs' so as to qualify for MODVAT credit under Rule 57A read with Rule 57B of Rules, 1944. 21. Similarly, whether it can be treated to be 'capital goods' during the relevant period under Rule 57Q, we find that this aspect as already been considered in Central Excise Appeal No. 135 of 2005 - M/s Upper Ganges Sugar Industries Ltd. Vs. Commissioner Customs Central Excise (decided on 25.02.2012). This Court has held that Welding Electrodes do not satisfy requirement of capital goods under Rule 57Q and has answered the said question against assessee and in favour of Revenue. We respectfully have no reason to take a different view and follow the same. 22. Now, we come to Rules, 2001. The term capital goods has been defined in Rule 2(b) and input is defined in Rule 2(f). The same read as under :- 2.(b) capital goods means,- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Tariff Act; (ii) components, spares and accessories of the goods specified at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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