TMI Blog2015 (8) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... hakari Sakkare Karkhane Niyamit 2012 (9) TMI 709 - KARNATAKA HIGH COURT distinguished for the reason that, when it completely omits from consideration the important aspects of this Rule, which we have noted above, the specific purpose of the amendments to Rule 57Q noted by us in the foregoing paragraphs, then, all this would enable us not to agree with the judgment of the Karnataka High Court and to this limited extent. - Decided against assessee. - Central Excise Appeal No. 45 of 2004 - - - Dated:- 28-1-2015 - S.C. Dharmadhikari and Sunil P. Deshmukh, JJ. Shri Sushant Murthy with Sparsh Prasad i/b. Naresh S. Thacker, for the Appellant. Shri Pradeep S. Jetly, for the Respondent. ORDER This appeal arises out of the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai, dated 22nd January, 2004. 2. The Tribunal allowed the Revenue s appeal and therefore, the aggrieved assessee is before us. The appeal is admitted by this Court on the following two questions :- (1) Whether the Tribunal was correct in holding that storage tanks/vessels are excluded from the coverage of Rule 57Q of the Central Excise Rules, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of the Rules prevailing and at the relevant time. It accepted the said argument, which is upon plain reading of the Rule and the Table below. It is such a finding which is assailed before us by the assessee. 9. Mr. Murthy appearing for the assessee submits that Rule 57Q, even at the relevant time did not prohibit availing of such a credit. If these are capital goods and used in the factory of the manufacturer and without which the plant cannot work and function, then, the Modvat credit was rightly allowed. That could not have been disallowed. The reliance on the amendment w.e.f. 1st March, 2001 could not support the conclusion of the Tribunal, because that amendment is clarificatory in nature. It must be given a retrospective effect. 10. Mr. Murthy places reliance upon the view taken by the Karnataka High Court in the case of Commissioner of Central Excise, Mysore v. ICL Sugars Ltd. reported in 2011 (271) E.L.T. 360. 11. Mr. Jetly appearing for the Revenue would support the conclusion of the Tribunal. He would submit that no conclusion other than arrived at by the Tribunal is possible, in the light of the Rules. He has taken us through Rule 57Q and the Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engines falling under Heading No. 84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under Heading No. 84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub-heading Nos. 84.15, 85.18, 8422.10, 84.24, 84.29, 84.37, 84.40, 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 refrigerating and air-conditioning 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 air-conditioning appliances and machinery); 5. Components, spares and accessories of the goods specified against S. Nos. 1 to 4 above; 6. Moulds and dies; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be allowed if such capital goods were received in the factory before the 1st day of March, 1997. (6) A manufacturer shall be allowed credit of specified duty paid on capital goods manufactured by him for the manufacture of final products in his factory. (7) The credit of the specified duty on capital goods [other than those capital goods covered under S. Nos. 5, 7, 10, 11 and 12 of column (2) of the Table below 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 manufacture of excisable goods, in the factory of the manufacturer as certified by such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falling under Chapter 85 against serial number 3, there are certain deletions or exclusions. Similar is the position in relation to serial number 4. The components, spares and accessories of the goods specified against serial numbers 1 to 4 alone are mentioned against serial number 5. 14. If such is the sweep of Rule, then, it is not possible to agree with Mr. Murthy that the amendments or changes brought about after 1st March, 2001 are only clarificatory in nature. If the period of dispute is 1997-98 and at that time the capital goods of the appellant were not mentioned with the heading numbers in the Table column (2), then, it is not possible to infer that storage tanks and storage vessels being integral or essential part of the manufacturing plant were always included. The reference to them may not be found in column (2), but since they were used in the factory of the manufacturer and being the integral part of the plant, they always intended to be included. If that was the position, then, there was no need for a specific amendment or change. These submissions cannot be accepted for obvious reason. 15. Mr. Murthy has fairly brought to our notice the Cenvat Credit (Second A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of storage tanks. The assessing authority allowed Modvat credit in respect of water storage tanks on the ground that water is an essential raw material for manufacture of sugar after conversion into steam. The water storage tank is a component of the main machinery, namely boiler and the Excise duty paid on the inputs in the construction of water storage tanks are eligible for availing Modvat credit. However, the Assessing Officer disallowed the Modvat credit in respect of syrup and molasses storage tank-MS Staging of tank and shell plates/bottom plates/roof plates used for constructing non-excisable final molasses storage tank and shell of final molasses storage tank, under Rule 57U of the Central Excise Rules, 1944. The reasoning given for disallowing the Cenvat credit to these storage tanks was that the molasses tank is constructed on the floor with a concrete foundation and the shell of the final molasses storage tank will be placed over the concrete to hold about 2500 tons and since the final molasses storage tank is erected to the earth, it becomes non-excisable. Therefore, any components used in the non-excisable molasses final storage tanks are ineligible for Mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. Under these circumstances even though the said insertion was in the year 2001 we are concerned with the period anterior to the said insertion. 5. Having regard to the aforesaid facts and also the fact that the assessing authority has himself extended the benefit to storage tank storing water as a component to main machinery namely, boiler, he ought to have extended the benefit to the storage tanks which are also part of the factory premises, in which the bye-products are stored and thereafter sold as a finished product. In that view of the matter, we do not find any justification to interfere with the orders passed by appellate authority. In those circumstances we answer the substantial questions of law in favour of the assessee and against the Revenue. 18. We are of the opinion that the Karnataka High Court s judgment must be seen in the light of the admitted factual position and noted by it in Para 2. Therefore, the Cenvat credit was disallowed on the storage tanks and of the nature described in Para 2, not on the ground that there was non-inclusion thereof in column (2) of the Table below Rule 57Q. The denial thereof is on distinct ground. That was because the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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