ORDER
G.A. Brahma Deva, Member (J)
1. This is an appeal filed by the Department against the Order-in-Appeal No. 210-CE/MRT/95, dated 21-7-1995 passed by the Commissioner (Appeals), Customs, Central Excise, Ghaziabad (U.P.). The issue relates to the denial of Modvat credit. Modvat credit has been denied by the Asstt. Collector on the ground that chilled water coil and weighing machine are not capital goods. He observes that the items are used in the air handling unit which in turn is used for air conditioning of the plant and thus not covered within the definition of ‘capital goods’. On the other hand, the Commissioner (Appeals), on appeal, filed by the party has observed that definition of the capital goods occurring under Rule 57Q is wide enough for taking within its fold all types of machinery, equipments etc. used for producing the goods. The chilled water coils is used for the air handling unit which is meant for bringing down the temperature in the coating room. The chilled water coils is therefore, covered under definition of capital goods in the Explanation under Rule 57Q. Similarly, he observes that since the weighing machine is used in weighing the raw material the same will also fall under 1(a) of the Explanation.
2. Heard Shri Ramsaran, the learned Departmental Representative for the Revenue and the respondents were represented by Shri M.P. Devnath, the learned Advocate.
3. Shri Ramsaran, the learned DR reiterated the grounds taken by the Department in denying the Modvat credit on the ground that the items are not capital goods as per the definition under Rule 57Q. Shri M.P. Devnath submitted that the issue in this case has been covered by the decision of the Gujarat High Court in the case of Industrial Machinery Manufacturers Pvt. Ltd. reported in 1965 Vol. 16 STC 380 wherein it has been held that “Humidifiers used by cotton textile mills in order to maintain certain humidity for the purpose of increasing the strength of yarn, avoiding breakages of yarn and improving the quality of yarn, are essential to the modern textile industry. They are therefore, machinery used in the manufacture of cloth and fall within Entry 15 of Schedule C to the Bombay Sales Tax Act, 1959, and not within Entry 20 of Schedule C.” He submitted that since the machinery as such has not been defined in the Central Excise Act. On the analogy this item has to be treated as a machinery following the ratio of the aforesaid decision.
4. I have carefully considered the matter. As per the Explanation to Rule 57Q, capital goods means –
(a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substances for the manufacture of final products;
(b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and
(c) moulds and dies, generating sets and weigh bridges used in the factory of the manufacture.
In view of the wide enlarged meaning of the capital goods as per the Explanation to Rule 57Q, it is clear that not only machinery which brings about change but also parts and accessories of machinery or appliances used for the purpose of manufacture of the final product [are capital goods] and accordingly, the Commissioner (Appeals) was right in holding that Rule 57Q is wide enough to cover the items in question. Since I do not find any infirmity in the impugned order on this issue, I accept the plea of the respondents and in view of the stand taken, the appeal filed by the department is hereby dismissed.