TMI Blog2018 (11) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] while allowing credit on cement and steel used in the construction of jetties. Jetty is used to provide port service and under that circumstance, it is a capital good directly used for the provision of services. The Show Cause Notice essentially charges that these goods are used for construction and therefore, cannot be considered as capital goods. The claim of the credit needs to be tested as per the user test prescribed in the decision of the Hon’ble Apex Court in the case of Jawahar Mills [2001 (7) TMI 118 - SUPREME COURT OF INDIA] - the issue is remanded to original adjudicating authorities to examine the exact use of the goods and test the admissibility of credit. Appeal allowed by way of remand. - Appeal No. E/1043/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pheld by Larger Bench of Tribunal in the case of Andhra Sugars Ltd. 2011 (272) ELT 113 (Tri-LB). He also relied on the decision of Hon ble High Court of Rajasthan in the case of Hindustan Zinc Ltd. 2007 (218) ELT 503 (Raj.). He also relied on the decision in the case of Shree Cement 2017(358) ELT 535 (Tri.-Del.) wherein the credit on these items, namely cement and steel, was held to be inadmissible when used for construction of floor, column, raft, retaining wall, etc. 4. We have gone through rival submissions. We find that at the material time rule 57 A and rule 57Q of the Central Excise Rules, 1944 were the relevant rules which dealt with admissibility of credit as input and as capital goods respectively. In the case of Ispat Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in the production of final products. Thus following the decision of the Tribunal in United Phosphorous, Sirpur Paper Mills, Simbhoali Sugar Mills and Lloyds Steel we hold that Modvat credit is admissible on the structural items which are so used as to make the machinery vibration free. We observe that over the years Rule 57Q and the explanation thereto has been interpreted liberally to take even the structurals in the ambit of capital goods provided that such structurals are closely associated with the machinery installed in a plant. The said order was challenged before the Hon ble High Court of Bombay which upheld the said decision. The distinction laid down by the Tribunal in the said case was that if the cement and steel is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts and accessories of the goods mentioned in clause (a) used for the purposes enumerated therein would also be Capital goods and qualify for Modvat credit entitlement. Clause (c) makes 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 (c) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty exemption. 6. The contention of learned Additional Solicitor General that the aforesaid decision and other decisions referred by the Tribunal in the impugned order were cases involving sales tax and income tax and, therefore, the Tribunal should not have relied on those decisions is without any substance because the real question is that of the principle laid down by a decision. In view of the liberal language of the provision; Mr. Rohtagi fairly and very rightly did not seriously dispute that if any of the items enumerated in explanation 1(a) is used for any purpose mentioned therein for the manufacture of final products, it would satisfy the test of Capital goods . The main contention of Mr. Rohtagi, however, is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Capital goods . The stand of the revenue was not as has been projected now by Mr. Rohtagi. In this view, the question of directing remand of these matters for fresh decision by the Tribunal does not arise. On the facts and circumstances of these cases, therefore, the stand that the items in question are not used for manufacture of final product cannot be accepted for the reasons aforestated. The test necessary for determining admissibility of credit on cement and tor steel depend on the actual use the said goods are put into. The findings are similar to the findings of tribunal in case of Ispat Industries (supra) upheld by Hon ble High Court of Bombay. 4.2 The Show Cause Notice essentially charges that these goods are used for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
