TMI Blog2022 (4) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 430 - ALLAHABAD HIGH COURT] , while considering the issue as to whether hydraulic excavator is machinery or a motor vehicle, has held that hydraulic excavator will come within the purview of machinery . The Hon'ble Supreme Court in the case of BOSE ABRAHAM VERSUS STATE OF KERALA AND ANOTHER (AND OTHER APPEALS) [ 2001 (2) TMI 890 - SUPREME COURT] has treated excavators and roadrollers as motor vehicles required registration for the purpose of Motor Vehicle Act, liable for levy of entry tax. The Hon'ble Apex Court in the said judgement dealt with the issue with regard to levy of entry tax or not on excavators and road rollers. On the said background, the Hon'ble Court was pleased to hold that merely because of motor vehicle is put to a specific use, such as, being confined to enclose premises, will not render the same to be a different kind of vehicle as they are registered under the Motor Vehicle Act and liable for payment of entry tax - The issue in hand is entirely different. The issue in hand is not the levy of tax, but the issue is as to whether purchase of loader and tipper can be considered as capital goods within the meaning of section 2(f) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 2(ar) of the Act covers only those vehicles which are used for transportation of goods? ii) Whether input tax credit can be denied on spare parts of loader and tipper, which are integral part of manufacturing process, without which, the manufacturing process, even if theoretically possible, is commercially inexpedient in view of the Apex Court judgement in the case of M/s J.K. Cotton Spinning Weaving Mills Co. Ltd. vs. STO, Kanpur AIR 1965 SC 1310 and Jayaswal Neco Ltd. vs. CCE, Raipur 2015 VIL 31 SC decided on 13th March, 2015? iii) Whether the Tribunal erred in law in ignoring the definition of 'vehicle' under the U.P. VAT Act and thereafter relying on the Apex Court judgement in the case of Bose Abraham vs. State of Kerala AIR 2001 SC 835, which was rendered in the context of Motor Vehicles Act, 1988 and the definition of 'vehicle' under both the Acts are substantially different? 3. Learned counsel for the applicant submits that the Company is engaged in mining of boulders from the mine situated at Sonbhadra. From the boulders, the applicant manufactures gitti and bhassi in the stone crushing plant situated within the mining area. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is used and then loader is used for loading to the hopper of the stone crushing plant. It has further been averred that without the help of these two machines, manufacturing/processing activity cannot be done. It is further averred that these two machines, i.e., tipper and loader, are captively being used within the mining area, where the crushing plant is also situated. Therefore, these two machines should be treated as capital goods . 7. Before proceeding further, certain provisions of the U.P. VAT Act, U.P. VAT Rules and Central Motor Vehicle Rules are necessary to be looked into, which are as follows: U.P. VAT Act Section 2(f) capital goods means any plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation used for manufacture or processing of any goods for sale by the dealer and includes:- (i) components, spare parts and accessories of such plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation; (ii) moulds and dies; (iii) storage tank; (iv) pollution control equipment; (v) refractory and refractory materials; (vi) tubes and pipes and fittings thereof, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the goods out of the territory of India; or B-transferred or consigned outside the State otherwise than as a result of a sale; or (ii) manufacture of any exempt goods except non-vat goods and where such manufactured goods are sold in the course of export of the goods out of the territory of India; or (iii) generation of electrical energy, where such energy is used for the manufacture of any taxable goods other than non vat goods and such manufactured goods is,- A- sold within the State or in the course of interstate trade or commerce or in the course of export of the goods out of territory of India; or B-transferred or consigned outside the State otherwise than as a result of a sale; or (iv) generation of electrical energy where such energy is used for the manufacture of any exempt goods and such exempt goods is sold in the course of export of the goods out of territory of India; and the amount of input tax shall be computed and be claimed in prescribed manner. Explanation: For the purposes of this clause,- (a) if 90% of electrical energy generated is consumed for the purposes referred to in sub clauses (iii) and (iv), 100% Input T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within factory premises are capital goods. Further, exclusion clause (iv) of section 2(f) provides that vehicle used for transporting goods or passengers or both, on which items ITC will not be available. 9. Section 2(f) (ar) defines vehicle , which means any kind of mode of transportation used for carriage of goods including motor vehicle constructed or adapted for the carriage of goods, or any other motor vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers including every wheeled conveyance, pull or push cart including animal drawn cart, animal, trailer, trolley, bicycle, tricycle, carrier, etc. Rule 2 (ca) of the Central Motor Vehicle Rules defines construction equipment vehicle . Perusal of the said sections would clearly show that the loader is specifically covered by the definition of construction equipment vehicle and tipper, being designed off-highway operations in mining, industrial undertaking, irrigation and general construction but modified and manufactured with on or off or on and off highway capabilities. 10. The facts are not in dispute that tipper and loader are said to be used capti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that these items of goods are purchased for use in processing of ore for sale. The assessee submitted that mining of ore and processing it for the purpose of sale by carrying out blending through the Mechanical Ore Handling Plant constitute one integrated process and carrying the ore from the mining site to the river side and from the river side to the Marmagoa harbour where the processing is being done, is part of this integrated process and hence the items of goods purchased for use in this latter operation are eligible for inclusion in the Certificate of Registration. We think there is great force in this submission of the assessee. Where a dealer is engaged both in mining operation as also in processing the mined ore for sale, the two processes being interdependent, it would be essential for carrying on the operation of processing that the ore should be carried from the mining site mined ore for sale, the two processes being inter-dependent, it would be essential for carrying on the operation of processing that the ore should be carried from the mining site where the mining operation comes to end to the place where the processing is carried on and that would clearly be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory where the manufacturing process starts. It appears that the process of mining ore and manufacture with the aid of ore copper goods is an integrated process and there would be no ground for exclusion from the vehicles those which are used for removing goods to the factory after the mining operations are concluded. Nor is there any ground for excluding locomotives and motor-vehicles used in carrying finished products from the factory. The expression goods intended for use in the manufacturing or processing of goods for sale may ordinarily include such vehicles as are intended to be used for removal of processed goods from the factory to the place of storage. If this be the correct view, the restrictions imposed by the High Court in respect of the vehicles and also the spare parts, tyres and tubes would not be justifiable. 13. In the aforesaid judgement, the Hon'ble Supreme Court has held that if any machinery or vehicle is used for carrying from mining site to the place of processing, which covers for inclusion in the registration certificate, as without which the entire operation of mining and processing work cannot be done and is to be treated as one integral pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or vehicle has entered into a local area to attract tax under the Entry Tax Act or any concession given under the local ales Tax Act will have to be dealt with in the course of assessment arising under the Entry Tax Act. 18. The Hon'ble Apex Court in the said judgement dealt with the issue with regard to levy of entry tax or not on excavators and road rollers. On the said background, the Hon'ble Court was pleased to hold that merely because of motor vehicle is put to a specific use, such as, being confined to enclose premises, will not render the same to be a different kind of vehicle as they are registered under the Motor Vehicle Act and liable for payment of entry tax. 19. The issue in hand is entirely different. The issue in hand is not the levy of tax, but the issue is as to whether purchase of loader and tipper can be considered as capital goods within the meaning of section 2(f) of the VAT Act or not. The levy of tax is not in dispute in the case in hand and therefore, the judgement in the case of Bose Abraham (supra) will not be of any help to the Revenue and the same is distinguishable on the facts circumstances of the present case. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g used as inter-dependent or integral part of the processing operation. It is not the case of the Revenue that the applicant is selling boulders. It only sales gitti and bhassi after crushing the boulders, which could be said to be the final product of the applicant. Prior to coming into existence of gitti, boulders cannot, by any stretch of imagination, be said to be goods so far as the applicant is concerned as its raw material. Therefore, the exclusion clause will not be applicable in the case in hand. 24. In view of the aforesaid discussions, the tipper and loader are captively used for manufacturing activity within the mining area where the stone crushing plant is situated, are covered under the definition of capital goods , is entitled for Input Tax Credit under section 13(1)(b) of the U.P. VAT Act, 25. If the mining and crushing are not captively done, so that they constitute one integral part of the process, i.e., mining and boulders crushing, within the mine area, then not is covered under the head capital goods . Further, if the mining is not captive mining, but the boulders are supplied or sold to other person or persons, then the benefit of Input Tax Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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