ORDER
V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. Binani Cement Limited, the issue involved is regarding eligibility of certain items to capital goods credit under Rule 57Q of Central Excise Rules, 1944.
2. We heard Shri Sudhir Gupta, learned Advocate for the Appellants and Shri Jagdish Singh, learned SDR for the Revenue. The submissions made by the learned Advocate and the learned SDR and our findings on the goods involved are as under: –
3.1 Cable Trays – the learned Advocate has submitted that the cable trays are accessories technically designed to provide support to cables laid down from main control room to various machine/machinery of the cement plant; that the cable trays are essential components/accessories in the process of manufacture as without it power cannot be properly supplied to the process; that in view of the judgment of the Supreme Court in the case of CCE, Coimbatore v. Jawahar Mills Limited, 2001 (132) E.L.T. 3 (S.C.), the Modvat credit is admissible on cable trays. He has also relied upon the decision in the case of CCE, Chennai v. SPIC Limited, 2002 (150) E.L.T. 257 (T).
3.2 On the other hand, learned SDR has submitted that as per Explanation to Rule 57Q at the relevant time, the capital goods means machine, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; that the capital goods also means components, spare parts and accessories of machine, machinery, etc.; that the cable trays are not used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products, nor these are accessories to any machine/machinery, etc.
3.3 It has been held by the Supreme Court in the case of Jawahar Mills Limited that ”the definition of the capital goods given in Explanation (1) to Rule 57Q is very wide and the language used in the Explanation is very liberal and if any of the items enumerated in Explanation 1(a) and 1(b) is used for any purpose mentioned therein for the manufacture of final products, it would satisfy the test of the capital goods.” Applying the test laid down in the Jawahar Mills Limited, we hold that the cable trays are covered by Explanation which defines capital goods as these are used to provide support to cable which provides power for running of the machinery which manufacture the final products i.e. cement manufactured by the Appellants. Thus, the cable trays are eligible capital goods.
4.1 Steel Tubes – as per the learned Advocate the steel tubes are used for flow of various media like air, hot gases, water within the plant in the factory, centralized lubrication of the pyro-processing section and cooler section of the plant; that for conveying water from one process to another, compressed air for running pneumatically operated devices and to convey fine coal to burning point of the kiln are the main function of the steel tubes. He relied upon the decision of the Tribunal in the case of CCE, Chandigarh v. Gujarat Ambuja Cement Limited, 2000 (115) E.L.T. 579 (T) wherein the capital goods credit was held to be available in respect of black steel tubes used for carrying cool water for cooling critical parts in the plant on the ground that they participate in the process of manufacture. The reliance has also been placed on the decision of the Tribunal in the case of E.I.D. Parry (India) Limited v. CCE, Trichy, 2002 (150) E.L.T. 765 (T) where in the Modvat credit was allowed in respect of pipes and pipe fittings used for transferring raw material, process fluids, water and for transferring final products to storage tanks. He has finally submitted that the Commissioner (Appeals) under the impugned order has disallowed Modvat credit not only on the ground that these steel tubes do not produce any goods or process any goods but also on the ground that the pipe tubes/pipes were specifically brought under the purview of the capital goods only with effect from 23-7-1996.
4.2 In view of the use to which the steel tubes are put by the Appellants, namely, conveying water, compressed air and fine coal, it cannot be said that these are not used to produce or process any goods and in view of the decided case law, the capital goods credit under Rule 57Q is available in respect of steel tubes.
5. Spun Pipes – the learned Advocate has submitted the clinker produced in kiln at 1800°C is cooled down in cooler section to 100°C before it is transported for further processing; that the process of cooling the clinker, the water is required which is transferred from tube wells by spun pipes laid underground; that as such spun pipes are eligible for capital goods credit. We agree with the submissions of the learned Advocate that the spun pipes are used for producing the clinker which is finally used in the manufacture of their final product, namely, cement. Thus the Modvat credit is available to the Appellants in respect of duty paid on spun pipes.
6.1 M.S. Gratings – the learned Advocate mentioned that M.S. Gratings are supplied along with equipment for providing necessary access and for operation and maintenance of the main equipment i.e. limestone stacke and reclaimer, cooler and raw mill. He has also relied upon the decision of the Tribunal in the case of J.K. Cement Works v. CCE, 2000 (116) E.L.T. 52 (T) and CCE, Chandigarh v. Steel Strips Limited, 2002 (149) E.L.T. 1291 (T) = 2002 (51) RLT 1055 (T).
6.2 The learned SDR has contended that the M.S. Gratings are not capital goods as they are neither producing or processing nor bring about any change in any substance for the manufacture of final products. From the submissions made by the appellants, it is not clear as to how M.S. Gratings are used in the process or production of the goods or these are accessories of the machine/machinery, etc. The appellants thus have not succeeded in establishing that these gratings are eligible capital goods. Accordingly the appellants are not eligible to take credit of duty paid in respect of M.S. Gratings.
7. Lock Pin Washer – the learned Advocate has mentioned that the lock pin washers are components of weight feeders installed in raw mill, coal mill; that the weigh feeders provide controlled and required raw material feed to respective mills for further processing and as such these items are eligible capital goods. On the other hand, the learned SDR has submitted that the Commissioner (Appeals) has given a specific finding that the Appellants have failed to indicate the actual installation of lock pin washer in their factory; that the item can be used in wide variety of goods which may not be used directly in plant and machinery under Rule 57Q. We do not find any force in the submissions of the learned SDR. The Appellants have claimed that the these lock pin washer are used for weigh feeders which provides controlled and required raw material feed to respective mills. Accordingly, the capital goods credit is available in respect of the duty paid on these lock pin washer.
8. Iron and Steel Structure – the learned Advocate has mentioned that various items are included under Iron and Steel Structures; that Access Platforms are essential components and accessories of the cement mill which have been installed to convert the clinkers into cement; that without these accessories, the cement mill cannot be operated. The SDR has contended that access platforms are neither machine/machinery of any mill nor accessories to any machine, etc., that these are simply used to access to the mill and as such these are not capital goods as per Explanation (1) to Rule 57Q. We find force in the submissions of the learned SDR that these access platforms are not capital goods as defined in Explanation (1) to Rule 57Q since these platforms are neither machine/machinery or appliances nor components or accessories of machine or machinery, etc.
9. The Appellants have also claimed the Modvat credit of duty paid on Base Frames on which the motor of the fan is mounted. It is evident from the base frame that it is not a component or accessory of any machine/machinery used in the process of producing any goods and as such the Modvat credit is not available to them. Similarly, we find that Channel for Scanner, Column for Air Duct, Column and Cross Girder are only structural materials which cannot be considered as parts and accessories of any machine or machinery which is used in producing or processing of any goods. We, therefore, hold that the Modvat credit is not available in respect of these items also. Similarly, capital goods credit will not be available in respect of Horizontal Beam, Back Cross Beam, Plates for Roof as these are structural materials and not parts or accessories of any machine/machinery, etc.
10. We, however, agree with the learned Advocate that the Modvat credit will be available in respect of Components for Kiln Hood, Chain Links, Pattern, Bracket for Power and Control Cable Drums as these are used in producing or processing of the goods. The appeal is thus partly allowed.