TMI Blog2007 (3) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ments used in various Sections / sub-sections of the petitioner's plant? 2.Whether in view of the fact that steel items were used a parts and components of eligible machinery and not used as building material or raw material, can there be any justification for disallowing the Modvat Credit? 3. Whether an item will fall within the definition of capital goods or not depends upon the use to which it is put to and consequently when steel items in question have been used as parts / components of machinery, the same would also necessarily be capital goods? 4. Whether in the facts and circumstances of the present case, the precincts of the plant area, where the crusher and conveyor belt are installed, can be called as a factory within the meaning of Section 2(e) of the Act? 5. Whether the mining area and the area covered under the crusher and the conveyor belt reaching plant falls within the premises / precincts of the factory as defined in Sec.2 (e) of the Act? 6. Whether capital goods used in the precincts of the factory area for obtaining crushed limestone and transporting crushed limestone into raw mill which is then used in the plant for the manufacture of cement can be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was right, in the facts and circumstances, to disallow the claim of the appellant to modvat credit' in respect of duties paid on railway track material used for transporting of coal and finished products in terms of rule 57Q for the reason that the railway track is not directly involved in manufacturing process." 6. The third controversy raised in these appeals relates to claim of the assessee to modvat credit of the "duty paid on the capital goods used on site at captive mines which is connected with the principal plant through conveyor belts for carrying mineral as raw material to plant and the machinery involved at the mines site for the purpose of winning minerals making it use-able and transporting the same to the raw mill where it is used for the purpose of manufacturing Cement." 7. The claim of availing modvat credit in respect of capital goods used at mine site was disallowed on the ground that the mine site is not part of factory or precincts of the factory and is not involved in the manufacturing process. In other words, the question arises for consideration is : "whether in the facts and circumstances of the case the manufacturer can avail modvat credit of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Modvat credit entitlement. Clause (c) make moulds and dies, generating sets and weigh bridges used in the factory of the manufacturers as capital goods and thus qualify for availing Modvat credit. The goods enumerated in clause © need not be used for producing the final product or used in the process of any goods for the manufacture of final product or used for bringing about any change in any substance for the manufacture of final product and the only requirement is that the same should be used in the factory of the manufacturer. Thus, it can be seen that the language used in the explanation is very liberal." 12. The aforesaid definition of 'Capital goods' is very wide. Capital goods can be machines, machinery, plant equipments, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be 'Capital goods', and, therefore, qualify for availing Modvat credit. As per clause (b), the components, spare parts and accessories of the goods mentioned in clause (a) used for the purposes enumerated therein would also be 'Capital goods' and qualify f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effluents in a plant manufacturing a particular 4 end product is part and parcel of the manufacturing process of that end product." 15. This Court had occasioned to consider this aspect of the matter and in appellant's own case in D.B. Central Excise Appeal No.5 ( UOI Vs. Aditya Cement ) decided on 8.11.2005, the issue related to the claim of manufacturer to avail modvat credit in respect of item used in workshop meant for repairing the machine which was used for manufacturing of final product. The Tribunal had accepted the contention of the assessee and hence, the revenue was in appeal. This Court after referring to the aforesaid two decisions and provisions of Rule 57Q opined : "It leaves no room of doubt in our mind that in all circumstances, direct involvement with producing or processing any goods or for bringing about any change in any substance for the manufacture of final products with the machines, machinery, plant, equipment, apparatus, tools or appliances are not essential condition, if it fails in any of the clauses (b), (c) and (d) the essential condition of direct involvement of the capital goods in the manufacture in process is not to be seen." 16. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are used as providing parts and components of the plant and machinery and becomes essential elements of the machine itself without which the machinery would not be functioning smoothly and properly. Therefore, the direct involvement of those parts and components which are essential to hold the machine become part and parcel of the machine itself. Such components and parts of the machine become eligible for availing modvat credit of duties paid thereon. In view thereof the appellants must be held entitled to avail modvat credit of duties paid on 5% of the total value of iron and steel purchased by manufacturer used as components and parts of the machines. It is not in dispute and no claim is laid to other 95% of the steel and iron. 20. So far as the claim to Railway Track material is concerned, it is common ground that the same has been used for transporting of coal and product of cement. Apparently, though the coal is not end product of the appellant but used as essential adjunct of plant for feeding it with fuel, the essential element of production process for manufacture of cement. Without supply of fuel the plant does not function. Therefore, the Railway Track used for on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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