ORDER
K.C. Mamgain, Member (T)
1. Heard both the sides.
2. The appellants are disputing the denial of Modvat credit on the following capital goods :-
1. Head Beams for Elevators.
2. Parts of Pollution Control Equipment
3. Parts of Stacker Reclaimer
4. Cone (Part of Coal Mill)
5. Structural Support for Conveyor System.
It was pleaded by Shri Sanjay Grover, Id. Advocate that in this case, the dispute is for the period prior to 23-7-96. Head Beams for Elevators, which were received by the appellants in February, 1996 are not parts of Civil Construction materials but are actual accessory for working of Elevator system. Bucket elevator is used for lifting Raw Mill rejected limestone pieces vertically and feeding it to the main mill feeding belt conveyor. This Bucket Elevator lifts the mill rejected limestone from the raw mill at ground level through Bucket Elevators and conveys it to the height of 31 metres. Bucket elevators consists of a series of buckets, mounted on an endless chain, which moves vertically upwards. Steel casing encloses the buckets. Buckets mounted at paced intervals are loaded by scooping up material from the elevator boot/bottom. Material is discharged by centrifugal action as the bucket passes over the head wheel. Thus bucket elevator are an essential part of the plant for conveying of material. Head Beam is structural component to the monorail needed for the erection and maintenance of elevator. It is installed at a height of 31 metres from the ground level and is supported by civil structure from the either end.
Head Beam is the basic structure for the erection and maintenance of the elevator system. He relied on the following decisions :
(1) Crystal Cable Industries Ltd. v. CCE, Calcutta [2001 (124) E.L.T. 1117 (Tribunal)] where it was held that the structurals are meant for movement of the Crane without which Crane cannot function. As such they become part of the entire Crane system installed in the factory.
(2) Global Sugar Ltd. v. CCE, Kanpur [2000 (119) E.L.T. 611 (Tribunal)] where it was held that MODVAT Credit is admissible on plates, white lead, shapes and sections, M.S. angles, channels, steel structures for boiling house.
(3) New J.K. Cement Works v. CCE, Jaipur [1999 (113) E.L.T. 428 (Tribunal)] where it was held that the supporting structures of steel is to be considered as part of the plant, having regard to the functions it performs of supporting the clinker hopper through which clinker is fed into the dumpers.
Regarding parts of Pollution Control Equipment received from November, 1995 to February, 1996, it was pleaded that during the relevant period, Explanation (1) to Rule 57Q defined capital goods as below :-
“(a) machines, machinery, plant, 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’;
(b) …
(c) …
(d) Following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer –
i. All goods falling under Heading Nos. 84.02, 84.05, 84.06, 84.11, 84.12, 84.16, 84.17, 84.19, 84.21, 84.23, 84.25 to 84.28, 84.80, 85.05. 85.35, 90.11, 90.12, 90.13, 90.16, 90.17 and 90.24 to 90.31;
ii…
iii…
iv…
v…
vi…
vii…
viii…
ix. components, spares and accessories of the goods specified against items (i) to (viii) above;
x…”
It was pleaded that the parts of the Pollution Control Equipment are all parts of main machinery falling under Heading 8421.10 and Heading 84.21 was a part of sub-clause (d) of Explanation (1) to Rule 57Q during the relevant period. Therefore, the parts of Pollution Control Equipment are eligible for Modvat credit.
Regarding parts of Re-claimer, it was stated that the Stacker Reclaimer is machine that is used as a material handling equipment ‘Stacker’ is used to make stock piles of crushed limestone layerwise. Reclaimer is used to reclaim the limestone from the stock pile in vertical manner so that a proper mix up of lime-stone is done and put into manufacturing process. This process is clearly part of manufacturing process as the feeding of limestone for manufacture of Clinker is an activity of manufacture. He also relied on para-17 of the decision of the Supreme Court in the case of CCE, Jaipur v. Rajasthan Chemical Works [1991 (55) E.L.T. 444 (S.C.)].
Regarding Cone, which has been received on 31-7-1996, it was pleaded that on 23-7-1996, Explanation (1) to Rule 57Q was replaced as under : –
(a) all goods falling under Chapter 84 (other than those falling under heading No. 84.07 to 84.09 compressors failing under Heading No. 84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub-heading Nos. 84.15, 84.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.74, 84.76, 84.78, expansion valves and solenoid valves falling under subheading No. 8481.10 of a kind used for refrigerating and airconditioning appliances and machinery);
(b) …
(c) …
(d) …
(e) …
(f) …
(g) …
(h) …
The goods of Heading No. 84.74 were excluded. However, under Notification No. 25/96-C.E. (N.T.), dated 31-8-1996, amendment was made and Heading 84.74 was deleted from the excluded goods under Clause (a) of Explanation (1) to Rule 57Q. Thus, Heading 84.74 was excluded from 23-7-1996 to 31-8-1996 for the Modvat purpose. Since the amendment carried out on 31-8-1996 was clarificatory in nature, credit cannot be denied.
For Structural Support for conveyor, it was pleaded that Structural Supports cannot be equated with civil construction. The Structural Supports is used for installation of conveyor. It is a component of the conveyor and not civil construction of the plant or foundation. The conveyor in the plant is used for shifting crushed limestone to stacker and stacked crushed limestone is shifted to raw mill hopper. Similarly, these are also used for shifting Latererite, Gypsum raw, clinker and packed cement bags. Conveyor system is essential and important part of main manufacturing process and these are eligible for credit.
3. Shri V. Valte, ld. SDR appearing for the Revenue pleaded that at the relevant time, the goods of Heading No. 7308.90 were not included in the definition of capital goods provided under Rule 57Q of the Rules as plant and machinery as such; but if they were received as components, spare parts and accessories of the plant and machinery specified therein, the credit was available on them. Head Beams for elevators fall under Heading 73.08. The Commissioner has rejected the credit on Head Beams for elevators on the ground that the assessee could not explain satisfactorily its use in factory. Regarding parts of Pollution Control Equipment, it was pleaded that dilution Control Equipments were included in the definition of capital goods only after 23-7-1996 and no credit is allowable on the parts or components of Pollution Control Equipments. The Commissioner has correctly denied the credit on the ground that the credit on these parts of Pollution Control Equipment was not available during the period from November, 1995 to February, 1996 which were prior to 23-7-1996. The parts of Re-claimer, which were received by the appellants from January, 1996 to April, 1996 fall under the Heading 8474.10. The Commissioner has observed that Bridge reclaimer and painted grating are the parts of stacker reclaimer under Chapter Heading 8474.10. Stacker reclaimer is not a machinery which is used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. During the period from January to April, 1996, Heading 8474 was not covered by the definition of capital goods provided under Rule 57Q of the Rules. Regarding Cone (Part of Coal Mill received on 31-7- 1996), it was pleaded that w.e.f. 23-7-1996 as per revised Explanation (1) to Rule 57Q, no credit was available to goods falling under Chapter Heading 84.74 and their parts w.e.f. 23-7-1996. Therefore, the Commissioner has correctly disallowed the credit of Rs. 66,250/- on these goods. On Structural Support for Conveyor, it was pleaded that the Structure items in question are neither machinery/equipment by itself nor their parts/components but components used in supporting and functioning of the conveyors. He stated that Structures for equipments falling under Heading 7308.90 cannot be eligible for Modvat credit. He relied on the Tribunal’s decision in the case of Nava Bharat Ferro Alloys Ltd. v. CCE, Hyderabad, [2004 (174) E.L.T 375 (Tribunal-Bangalore)], wherein it was held that columns of heavy fabricated structures and bracings, used for supporting columns of boiler are in the nature of construction material and are not eligible for credit as capital goods.
4. I have carefully considered the submissions made by both the sides.
5. I find that Head Beams for Elevators are structural components to the monorail needed for the erection and maintenance of elevator. The monorail has drive unit, chain, gears box, trolleys etc. are all installed and mounted on these beam. Without these Beams, the functioning of monorail system is not possible. I find that at the relevant time, under Explanation (1) to Rule 57Q, the capital goods means (a) machines, machinery, plant, 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’. The Head Beams are part of the elevator system for moving material during the process of manufacture of final products, therefore, these cannot be considered in isolation. These are the parts of the plants and machinery and are covered by Clause (a) to Explanation (1) below Rule 57Q at the relevant time. Therefore, CENVAT Credit is allowed on these capital goods.
The Parts of Pollution Control Equipments were received by the appellants during the period from November, 1995 to February, 1996. The Pollution Control Equipments were notified as capital goods only w.e.f. 23-7-96. No credit is allowable on Parts of Pollution Control Equipments as parts were not notified, at the relevant time. Therefore, the credit has been correctly denied by the Commissioner on the parts of Pollution Control Equipments.
Stacker Reclaimer are used as material handling equipment and material handling is an integral process during manufacture of final products, therefore, credit cannot be denied on these parts of reclaimers. These were covered by definition of capital goods under Clause (a) of Explanation (1) to Rule 57Q.
Cone (Part of Coal Mill) received by the appellants on 31-7-1996 on Credit of Rs. 66,250/- was availed on 23-7-1996. The Cones falling under Chapter Heading 84.74 were not eligible for Credit as capital goods as this Heading was excluded from the eligibility of the credit. Therefore, the Commissioner has rightly denied the credit of Rs. 66,250/- on these goods.
The Structural Support for Conveyor is an essential support for installation of conveyor and are accessories of conveyor systems. Since material handling equipments are eligible for credit, therefore, denial of credit on these supporting structure for conveyor is not correct as the supporting structures are accessories of the conveyor system and it is a material handling system which is covered by the definition of captial goods. Therefore, Modvat credit of Rs. 31,483/- was wrongly denied on these goods.
6. In view of the above, the appellants are eligible for Modvat credit for Head Beams for Elevators, Parts of Stacker Reclaimer and Structural Support for conveyor System. The Credit on other items has been correctly denied to the appellants. The appeal is disposed of in the above manner.