ORDER
V.K. Ashtana, Member (T)
1. Since this stay application in the above noted appeal came up for consideration and Shri C. Chidambaram, learned Consultant submitted that the matter lies in a short compass and is covered by number of earlier decisions, therefore the waiver and stay is granted and the main appeal itself is taken for consideration.
2. Learned Consultant submits that the order-in-appeal denies the Modvat credit on the storage tanks and dip rods located within the factory premises of the appellants and used for storing the raw materials on the ground that they are not in any way connected to the production of the final product. This he challenges in view of the decision in the case of Rajasthan State Chemicals Works reported in 1991 (55) E.L.T. 444 (S.C.) wherein it has been held that the manufacture is the end result of one or more processes through which the original commodities are made to pass and each step towards such production would be a process in relation to the manufacture. It was further held that “there is no warrant for limiting the meaning of the expression ‘in the manufacture of goods’ to the process or production of goods only”. In view of this concept of Rule 57Q, it was also held that the process of handling/lifting/pumping/transportation of the raw material is also a process in relation to the manufacture of goods if integrally connected with further operations. Learned Consultant submits that in view of the wider view taken by the Hon’ble Apex Court , while interpreting the scope of Rule 57Q, even the storage of raw materials within the factory premises would come within the particular meaning of the manufacturing process particularly because the end product cannot be manufactured without the availability of the raw materials. Learned Consultant further submits that in the case of Dabur India Limited reported in 1998 (98) E.L.T. 674 (Tribunal), it has been held that stainless steel tanks used for keeping the materials during the process of manufacture are eligible as capital goods under Rule 57Q. He also cites the decision in the case of Vivek Alloys Ltd. reported in 1998 (98) E.L.T. 156 (Tribunal) wherein it has been held as follows :-
“The expression “capital goods” has been defined as ‘machines, machinery, plant, equipment, 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, as also components, spare parts and accessories of the afoesaid machines etc., and moulds and dies, generating sets and weigh bridges used in the factory of the manufacturer. This was the definition as it stood at the relevant time.
6. Oxygen Tank and the Furnace can certainly be regarded as part of the plant. That being so, Oxygen Lancing Pipe must be regarded as component of such plant, and has to be regarded as “capital goods” for the purpose of the rule. The assessee would be entitled to the benefit of the rules in regard to duty paid on Lancing Pipe.”
He further submits that in para 10 thereof, the expression “plant” which is not defined under Central Excise law was considered by the Hon’ble Tribunal in this decision, in terms of Section 43 (3) of the Income-Tax Act and accepted the legal position that a wider meaning is to be given to the expression “plant”. He, therefore, submits that during the relevant period the explanation under Rule 57Q included the machines, machinery, plant, equipment, apparatus …nused for producing, or processing of any goods or for bringing about any change in any substance for the manufacture of final product. It also included the components etc. thereof. The learned Consultant submits that since these are parts or components of the plant for the manufacture of paints, therefore they would qualify under the said explanation as capital goods.
3. Heard learned SDR who reiterates the order-in-appeal and stresses very forcibly that the said storage tanks are not integrally connected to the manufacturing process and the manufacturing machinery. Therefore, they would not qualify as capital goods under Rule 57Q.
4. I have considered the submissions on both sides and the records of the case. It is not in dispute that the storage tanks are located within the factory premises. This is an admitted position in the findings in the order-in-appeal also. The only ground on which the learned Commissioner (Appeals) has denied Modvat credit as capital goods to these storage tanks is that they are not integrally connected to the manufacturing process and by themselves do not bring about any change in the raw materials. However, learned Consultant has pointed out that not only these tanks are located within the licence factory premises but they are also discharging liquid raw material through a system of pipelines and pumps into the manufacturing machinery as the use of these raw materials by another manner was not practical and feasible. I, therefore, find that the storage tanks which contain the raw materials are connected to the manufacturing process for the purpose of feeding the raw material for manufacture of paints. In view of the wider interpretation given to the manufacturing process in the case of Rajasthan Chemical Works supra wherein even pumping, lifting and otherwise handling of raw materials before the said raw materials get changed towards the final product has been held as integral to the process of manufacture and the equipment needed therefore has been held eligible as capital goods for Modvat credit, therefore, applying the same ano-logy and same wider scope explained by the Hon’ble Supreme Court, I find that even the storage of raw materials in storage tanks would be therefore connected to the process of manufacture because without the availability of the said raw material, the process of manufacture cannot take place. I also find that in the case of Vivek Alloys supra, it has been clearly held that the storage tanks are parts of the plant. Since the components and parts of the plant at the relevant time qualified under Rule 57Q, therefore I find that the storage tank as parts of the plant would also qualify for Modvat credit under Rule 57Q.
5. In view of the aforesaid findings, I set aside the impugned order and allow the appeal with consequential relief, if any, as per law.