JUDGMENT
S.S. Sekhon
1. We have heard both sides and considered the matter.
2. The present appeal has been filed against the Order of Commissioner (Appeals), vide the impugned Order denied credit, on an universal measuring machine, by coming to a finding that the said machine is not used in or in relation to the manufacture of the finished goods or intermediate goods nor it is used in the process of manufacture to bring about any change in any substance. He also came to a conclusion that the said machine is not used directly in relation to manufacture of the intermediary or final product and therefore its use is neither incidental or ancillary to the production of goods. He therefore denied the modvat credit under Rule 57Q.
3. The question of denial of modvat credit on capital goods under Rule 57Q has finally been settled by the Supreme Court in the case of Jawahar Mills [2001 (132) ELT 3 (SC)], wherein they have upheld the Revenue’s plea that credit cannot be availed for items which are alleged & found, to be not used directly or indirectly in relation to the manufacture of the final or intermediary products.
4. The appellants submitted that the said machine “is used for measurement of jigs, fixtures, gauges which are intended for manufacturing intermediary products and final products. The measuring profiles and probing directions and also graphically displays the results process is actuated by electrical impulses. The appellants claim that these checking of measurements are must for marketing their final products like Tie Rod Ends, Steering and Suspension linkage products which are safety precision items. Any mild deviation from the prescribed standards of its profiles and probing direction of the final product would cause damage to the life of the driver of the vehicle in which such final products are fitted into.
Appellants further submit that their jigs and fixtures are work holding devices which will be used in carrying out machining process that their stream of production starts from casting to matching and then to Assembly, the box casting and cover plate casting are to be machined as per the specification in the drawing of approved by the original Equipment manufacturers to whom such final products are intended to be supplied. Moreover, the position gauges are to be used to check and ensure transfer tubes while mounting assembly dimensions of main nut, box and rocker shaft are also periodically verified once jigs and fixtures are set in the initial middle and final stream of production. This clearly indicates as to how Universal Measuring Machine render good assistance in manufacturing process.
Appellants have exhibited sample-checking report obtained from this machine, which has not received attention which it aught to be. Merely because appellants made a statement that previously such checking were done manually no stretch of imagination could be made as if such machine is not used in the manufacturing process. Appellants submit that they are under the spade work for obtaining ISO 9002 Certificate for which stringent accuracy has to be maintained regarding the standard for which complying with specified measurements is the basic requirement.”
5. They appellants also relied on the decision in the case of Rajasthan State Chemical Works [1991 (55) ELT 444] that Quality Control and Testing would form part of the manufacturing process and also relied on the decisions of the Tribunal and High Courts granting modvat credit benefit to measuring and testing equipment.
6. The matter was heard when Shri Ishwar Hegde, Senior Executive submitted a written submission reiterating the decisions on measuring equipments and on a specific question, submitted that as regards the finding of the Commissioner (Appeals) and the material available on record to prove, that the goods in question were used in or in relation to manufacture of final/intermediary products is submitted in the first two paragraphs of the written submissions which read as under:-
“We manufacture among other items, Steering Gear Assembly for Tractor, which is a safety critical precision goods. We have procured a Universal Measuring Machine to measure the accuracy of jigs and fixtures used in the production and also to measure the dimensions of machined component of Steering Assembly which is our final product. Modvat credit has been taken under Rule 57Q of Central Excise Rules 1944, in the month of October 1994. It may please be noted that chapter heading 9031.80 of subject machine not disallowed for modvat credit as per Annexure to Rule 57Q. (Further credit on machinery falling under chapter heading 9031 has been specifically allowed in 95-96 budget).
In our appeal to the Commissioner of Central Excise (Appeals), Bangalore, in the grounds of appeal we had mentioned that “Mounting dimensions and Assembly dimensions of Main Nut, Box and Rocker Shaft are also periodically verified once jigs and fixtures are set in the initial – middle and final stream of production. Hence no stretch of imagination can be made holding that this machine is not used in the manufacturing process.” Inspite of our mention about the usage of subject machine in production, the Commissioner (Appeals) in his Order in Appeal (Para No. 4) has erroneously recorded that appellants have admitted the fact of measuring machine not used in or in relation to manufacture of their finished goods, which is totally misleading and not a fact.”
7. We have considered the submissions and find that no evidence has been produced to rebut the finding of the Commissioner (Appeals). The Commissioner (Appeals) has come to a positive finding that the machines are used to measure and not a final product or intermediary products. Jigs and Fixtures are in the nature of tools and capital goods and not the final products of the appellant. Since no material has bene produced to rebut the finding arrived at by the Commissioner (Appeals) we find no reason to upset the said Order.
8. In view of our findings this appeal is dismissed.
(Pronounced in open Court on 27/11/2001.