TMI Blog2002 (10) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The appellants were manufacturing sponge iron and MS ingots. For the manufacture of the former product, they were using a Rotary Kiln while for the manufacture of the latter, they were using an Induction Furnace. The appellants took Modvat credit on all the above items claiming the same to be eligible capital goods under Rule 57Q. The Department, by show-cause notice, proposed to disallow the credit on the ground that the items were not eligible capital goods for Modvat credit under Rule 57Q. In respect of Transformer (11KV), the Department maintained that since transformers of voltage 75 KV and above were specifically brought within the coverage of capital goods under clause (d) of the Explanation to Rule 57Q(1), w.e.f. 16-3-1995 (unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructural support to the Rotary Kiln formed a part of the immovable civil foundation and hence not eligible as capital goods under Rule 57Q of the Rules. In regard to GC sheets, the learned DR submits that the item was admittedly used for roofing the furnace and hence formed a part of the building that housed the furnace. It did not become part of the furnace itself. Referring to the transformer, the learned DR submits that only transformers of voltage 75 KV and above were included in the category of modvatable capital goods w.e.f. 16-3-1995, which, according to him, meant that transformers of lower voltages were excluded from the category of modvatable capital goods w.e.f. that date. The reference was to clause (d) of Explanation to Rule 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal's decision in Hindustan Sanitaryware Industries. In Lloyds Metals Engg. (supra), the question was whether the benefit of Modvat credit under Rule 57Q could be denied in respect of HR plates used in the civil foundation for certain machinery in the assessee's factory on the ground that the goods became permanently attached to the earth. The Tribunal answered the question in the negative and held the HR plates to be modvatable capital goods. The ratio of this decision is applicable to the items used for replacement of parts of the structural support to the Kiln and the furnace. However, in so far as the GC sheets used in the roof of the furnace are concerned, none of the cited decisions appears to support the appellants' clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (d) for the purpose of Modvat credit and did not in any way detract from the applicability of the pre-existing clauses (a) to (c). Clause (a) declared that plant, machinery, equipment etc. used for the manufacture of final products were eligible for Modvat credit. Clause (b) laid down that parts components and accessories of such plant, machinery, equipment etc. were also eligible for Modvat credit. As rightly contended by the Counsel, the appellants transformer which was admittedly a part of the H.T. sub-station supplying electricity to the manufacturing plant which was admittedly located within the factory premises, was squarely covered by clause (b) as it formed a part of the plant falling under clause (a). The Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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