ORDER
S.L. Peeran, Member (Judicial)
1. This is a Revenue Appeal challenging one portion of the order in Appeal No.484/98 (M.III) dt.30.11.1998 Passed by the Commissioner (Appeals), Chennai.
2. The Commissioner (Appeals) disposed of two order in original by passing a common order. The Commissioner in this Appeal has agreed with only a portion of the order, in which the Commissioner (Appeals) has held that Modvat credit in respect of panel cooler is eligible and they are to be treated as “Capital Goods”. Revenue contends that panel coolers are not nothing but air conditioners and they have no connection with the manufacture of final product. It is stated that so long as it is merely maintaining the atmosphere cool within the factory that by itself will not make the panel cooler as Capital Goods; that they have relied on the Assistant Commissioner’s findings that the panel cooler, though fitted to capital CNC machine to maintain the temperature at their desire level for functioning of control panel which is not a part of the CNC machine; that by itself is not a ground to treat the item as capital goods as; it does not have any direct connection with the manufacture of final product.
3. I have heard the Ld. DR, Shri S. Kannan, and the Ld. Counsel Shri R. Raghavan and have considered the various submissions made by them. I am unable to agree with the Revenue’s contention that panel cooler which is attached to the CNC machine, to maintain its atmosphere is not required to be treated as capital goods. The assessee in their reply dt.27.8.96 have clearly asserted that panel cooler is fitted to the CNC machine and is not an air conditioner but it is a sophisticated electronic control system which is required control the atmosphere and in order to maintain the temperature of the CNC machine, the same is fitted to it. The machine has to regulate itself according to the temperature for the purpose of production of final product. They have to be treated as part of the CNC machines as it has specific function of the machine in producing of the final product. This contention has not been adverted in the grounds of appeal and no findings have been recorded by the Assistant Commissioner in the impugned order. While the Commissioner (Appeals) has accepted the pleas of the assessee after examining the write up of the machine and after examining as to how the temperature control is basic necessity for its functioning to produce final product. So long as the panel cooler is a part of CNC machine and functions along with the machine, it has to be treated as part of the main machinery itself. The main machine can function by regulating its temperature for the purpose of production of final product. In a similar situation, the Tribunal has held that so long as the item functions along with the main machine for the production of the final goods then Modvat credit cannot be denied as held by Larger Bench in the case of Jawahar Mills Ltd. vs. CCE., Coimbatore 1996 (108) ELT 47 (T). This has again been upheld by an other Larger Bench in the case of CCE, Indore vs. Surya Roshini Ltd. Earlier Larger Bench in the case of Union Carbide India Ltd. vs. CCE., Calcutta 1996 (86) ELT 613 (T) also has decided the isue and laid down the ratio for treating an item as a ‘Capital Goods’. The issue having reached finality it is but proper that the impugned order is upheld by dismissing the Revenue Appeal. Appeal is dismissed.
(order dictated and pronounced in the open court)