TMI Blog2001 (6) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... generating set in its factory with the fabricator M/s. Modi Mirrless Blackstone Ltd., in the case of Century Rayon Ltd. and M/s. Wartsila NSD (India) Ltd. in the case of National Rayon Corporation Ltd. These fabricators entered into an arrangement with the manufacturer by which they sold the engine and alternator initially, and subsequently assembled these into a generating set in the factory. 3. The respondents took credit of the duty paid on the alternator and the engine under Rule 57Q. The department objected to by issue of notices. The notices were commonly worded, proposing to deny the credit on the ground that the components i.e. engine and alternator were exclusively used in the manufacture of final product, diesel generating set, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of a diesel generating set, which was exempted from duty. It is necessary at this point to take note of the significant difference in phraseology between Rule 57A, relating to Modvat credit, of the duty paid on inputs (other than capital goods) used in or in relation to the manufacture of the final products, and Rule 57Q relating to credit to be taken of duty paid on capital goods. Rule 57A, specifically provides that the inputs must be used in or in relation to the manufacture of the finished product. There is no such requirement in Rule 57Q. All that it requires is that the capital goods must be used in the manufacture of the specified final products. The requirement that the capital goods must be used in or in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture brings in a component to replace a damaged or worn out component in any of the machinery in its factory, it could be argued that the component it is not directly used in the manufacture of the final product. The component can also be said to be used to manufacture a machine in which it will be fitted as a replacement, that machine already exists even in the absence of the component. Therefore, none of the components would ever be continued to be used in the manufacture of any commodity and therefore could not be capital goods. The absurdity of this conclusion destroys the merits in the submission. 7. The second ground is also equally without merit. No doubt, the manufacturer of the generating set was M/s. Wartsila NDS (India) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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