K.D. Mankar, Member (T)
1. The instant appeal is directed against the orders of the lower authorities whereby the claim for modvat credit on capital goods has been denied in respect of certain items of capital goods. The grounds for denial as stated in the show cause notice, are that the goods were not directly used in the manufacturing process or for bringing about any change in any substance for the manufacture of final products. Modvat credit of Rs. 2,26,970/- was disallowed and a penalty of Rs. 25,000/- was imposed by the adjudicating authority whose order has been confirmed by the Commissioner (Appeals). Hence the present appeal to the Tribunal.
2. Heard both sides.
3. The disputed items are Hydrogen Gas Cylinders and Pre-Amplifiers. It is pleaded by the appellants that, Gas Cylinders are part of the plant and machinery used for producing and completing the process of manufacture of hydrogen gas. Unless the hydrogen gas is filled in these cylinders, the Hydrogen Gas does not assume commercial existence. Therefore these cylinders are part of the plant and machinery used for producing and processing of the final product and are eligible capital goods under Rule 57Q of Central Excise Rules 1944.
4. The appellants have placed reliance on the judgment in the case of Commissioner of Central Excise, Raipur v. Hukumchand Jute Industries Ltd., reported in 2001 (137) ELT 633 (Tri.Kolkata). The said judgment relies upon another judgment of the Tribunal in the case of M/s. Lupin Laboratories Ltd., v. CCE reported in 1998 (100) ELT 52 (Tri) whereunder modvat credit in respect of duty paid on cylinders used for storing the liquid was permitted.
5. I find that the period involved in this dispute is prior to the change of definition of capital goods and the definition is wider prior to 16/03/95. Being a part of the industrial plant, the gas cylinders would be covered under the definition of capital goods, hence the credit is permissible.
6. As regards, “Pre Amplifier (CSH 9026.00.)”, these are parts of announcement system used by the control room. Modvat credit was denied on the ground that they are not eligible for credit, having no nexus with the manufacturing process. So far as this issue is concerned it has not been agitated in the appeal. Hence, the findings of the lower authorities have become final so far as the denial of credit on pre-amplifier is concerned.
7. Accordingly, the appeal succeeds so far as the hydrogen gas cylinders are concerned and the same is allowed with consequential relief, if any, in accordance with the law. Denial of credit by the lower authorities on preamplifier is upheld. However, the penalty imposed is set aside, since the issue of admissibility of credit was debatable.
8. The appeals disposed off as above.
(Pronounced in Court)