ORDER
P.G. Chacko, Member (J)
1. The short question arising for consideration in this appeal is whether capital goods credit is admissible to the appellants in respect of certain items claimed to be eligible capital goods, under Rule 57Q of the erstwhile Central Excise Rules, 1944. The lower appellate authority denied this benefit to the party in respect of the following six items:
1) Surface Miner [SH 8430.00 of the CETA Schedule] received in factory on 27.5.96
2) Accessories to DG set [SH 8503.00] received in factory on 27.5.96
3) Spares for Surface Miner [SH 8431.00] received in factory on 24.5.96
4) Spare parts for road milling machine [SH 8431.00] received in factory on 23.7.96
5) Spare parts (screws, clip plates etc.) [SH 8431.00] received in factory on 23.7.96
6) Disc grinding Mill with manual clamping device, grinding vessel, intermediate ring [SH 8474.10] received in factory on 13.3.97.
2. It is submitted by ld. consultant for the appellants that the credit taken on the last item mentioned above has been reversed to the extent of Rs. 18,028/- disallowed by the lower authorities and that the appellants have no grievance in this regard. As regards Surface Miner and Spares therefor, it is submitted that these were used in a captive mine in connection with mining of limestone required for the manufacture of cement (final product). It is submitted that credit on these items is admissible to the appellants as held by the apex court in Vikram Cements v. CCE Indore 2006 (197) ELT 145 (SC), wherein it was held that MODVAT credit on capital goods used in captive mine was admissible to the cement manufacturer. In respect of accessories to DG set, it is submitted that DG set was part of a captive power plant and, therefore, accessories thereto were eligible for capital goods credit under Rule 57Q as this rule stood at the material time. In respect of spare parts for road milling machine, it is submitted that MODVAT credit on these items is admissible to the appellants in terms of Board’s Circular No. 276/110/96-TRU dated 2.12.96, wherein the provisions of Rule 57Q w.e.f 23.7.96 were examined and it was clarified that, where credit was available to specified capital goods under the Rule, it was also available to components, spares and accessories of such capital goods irrespective of their classification. In respect of screws, clip plates etc., it is claimed that these items, which are found to have been used as accessories to main machinery falling under Heading 84.30, are also eligible for capital goods credit as they were used in connection with the manufacture of cement.
3. We have heard ld. SDR also, who reiterates the findings of the Commissioner (Appeals).
4. After considering the submissions, we find that, in order to allow capital goods credit on Surface Miner and Spares therefor, it requires to be established that the limestone mines, in which these items were used during the period of dispute, are captive mines. Neither of the lower authorities has entered any finding on this aspect. As regards accessories to DG sets, we note that DG set has been accepted as part of the plant and machinery. It is further noticed that, under Rule 57Q as amended by Notification No. 11/95-CE (NT) dated 16.3.95, electric generating sets were specifically mentioned for the benefit of credit and further that components, spare parts and accessories of such specified goods were also mentioned for the same benefit. Therefore, accessories to DG sets received in the appellants’ factory in May’ 96 were eligible for capital goods credit. In so far as spare parts for road milling machine are concerned, however, the position is different inasmuch as the eligibility of these items for capital goods credit has to be examined with reference to Rule 57Q as further amended by Notification No. 14/96-CE (NT) dt. 23.7.96. We find that, under the provision so amended, goods falling under Heading 84.31 were not eligible for capital goods credit and, consequently, spare parts of such goods were also ineligible.
5. As regards screws, clip plates etc. classifiable under Heading 84.31 and received in the factory on 23.7.96, the position is the same.
6. In the result, it is held that MODVAT credit is admissible to the appellants in respect of accessories to DG sets and the benefit is not admissible to them in respect of spare parts for road milling machine and other spare parts like, screws, clip plates etc. As regards Surface Miner and Spares therefor, the original authority shall first ascertain whether these items were used in captive mines and then proceed. If it is found that these items were used in captive mines, capital goods credit would be admissible to the assessee in terms of the Hon’ble Supreme Court’s decision in Vikram Cement (supra) and, otherwise, not admissible.
7. The appeal is disposed of in the above terms.
(Dictated and pronounced in open court)