ORDER
G.N. Srinivasan, Member (J)
1. This is an appeal filed by the department against the order passed by Commissioner (Appeals), Trichy wherein he has held that the asses-see is entitled to the benefit of Modvat credit.
2. The assessee are manufacturers of Cotton Yarn falling under Heading 5203 of the schedule to the Central Excise Tariff Act, 1985. The assessee availed Modvat credit to the tune of Rs. 6,71,327.97 on the following goods :-
1. Carding machine
2. Spare parts of blow room/carding/simplex machine
3. Ring spinning frames
4. Spares/accessories of ring spinning/doubling/cone
5. Rotary air filter
6. 30 HP TFO motor, DP 5KG refil, EMCO rectified and electric auto timer.
7. Paper cones, 7 ply cartons 44″ x 200 G.H.M. HDPE
3. The capital goods on which credit was taken appears to have been taken for the manufacture of cotton carded/combed, unspecified intermediate product chargeable to NIL rate of duty. Hence the Range Officer issued show cause notice denying the same. The Assistant Commissioner confirmed the same vide his order dated 24-4-1995. On appeal, the Commissioner remanded the matter to re-examine whether the cotton carded/combed are marketable or not and whether after 21-10-1994 in view of Rule 57F credit could be given after disallowing 2.5% of the credit for every quarter of use upto 21-10-1994.
4. The department challenges the same on the ground inter alia that the Notification No. 60/94, dated 21-10-1994 is not retrospective in its operation. In respect of electrical goods, it is argued by the department that the goods are used for control and distribution of electricity only and credit should not be allowed under Rule 57Q as the items are not used for producing or processing of any goods. They invited my attention to the judgment of the Tribunal in the case of C.C.E. v. Singaravellar Spinning Mills (P) Ltd., reported in 1998 (28) RLT 872 (Tribunal).
5. Learned Counsel Shri C. Saravanan invited my attention to the judgment passed by me in E/1464,1465/96-MD and E/1466/96-MD – Order Nos. 1704 to 1706/98, dated 27-8-1998 whereunder, I have remanded the matter in respect of the machine involving in post carded operation.
6. I have considered the rival submissions. In the case of C.C.E. v. Singaravellar Spinning Mills (P) Ltd. – 1998 (28) RLT 872 (Tribunal) the South Regional Bench in paragraphs 14, 15 & 16 has held as follows :-
14. This evidence clearly shows that the product is both marketed and marketable. What is more significant than the sale enumerated therein is that the two mills had no in-house carding/combing machines of their own and had to purchase carded/combed cotton from outside for the manufacture of yarn. Thus in a continuously recurring manner, this item is bought and sold. This is not a case of stray sales, as it continues over a long period of time. Neither is this case a case of any special technological gap. These are two units which are commercially engaged in spinning yarn. They have not felt the need for a carding/combing machine as they can buy the product from other known sources. This evidence clearly satisfies the law as laid down in the case laws of M/S. Bhor Industries, Moti Laminates and Indian Textile Paper Tube Co. (supra). The respondents have not led any evidence to the contrary, because mere expert or technical opinion of SITRA/CEMA is superseded here by actual marketability to such an extent that two units engaged in manufacture of yarn just do not consider it necessary to install carding/combing in-house facility, it is not disputed that carded/combed cotton is an essential stage in spinning of yarn and that yarn cannot be spun otherwise directly from cotton fibre.
15. The other argument that the same machine is used for MMF also is irrelevant as long as such use is not exclusive thereto. Respondent admits that cotton fibre too is fed-in to produce cotton combed/carded. Since we hold that these are goods, they fall under 52.02. In view of that the exclusion contained in Rule 57Q is applicable and the machinery used for obtaining carded/combed cotton is not eligible for MODVAT credit under Rule 57Q upto 20-10-1994.
16. We have perused the contents of Notification 60/94, dated 21-10-1994! A plain reading thereof shows that nowhere is there any word or phrase to specify that it is clarificatory in nature or that it applies with retrospective effect. Therefore, as per settled law, we refuse to read any intendment in it and the respondent’s plea on this account fail. Respondents in their cross appeal cite some circular of the Board. This Tribunal is not bound by it and would only consider the wording of the said notification.
7. Following the same, I accept grounds made by the department. However, in respect of items at Sl. No. 3, 4, 5, 6 and 7 they are used in post carding operation. Hence, following the said judgment of the Tribunal in Singaravellar Spinning Mills (P) Ltd. – 1998 (28) RLT 872 and the judgment of the Tribunal in Kandagiri Spinning Mills Ltd., I allow the appeal in respect of Carding machine and Spare parts of blow room. As far as remaining items are concerned, I dismiss the same. The appeal is disposed of in the above terms.