ORDER
V.K. Ashtana, Member (T)
1. These are two reference applications of Revenue arising out of common Final Order No. 1040 to 1042/98 dated 29-5-1998 [1998 (104) E.L.T. 421 (T)] on the issue of availability of Modvat credit under Rule 57Q on Spectrophotometer in the case of appellants M/s. Hydro S & S Industries Ltd. and on the Worm Wheel and Worm Shaft which is a conveyor system for carrying sugar bags filled with sugar to the stitching machine in the case of Kothari Sugars & Chemicals Ltd. The following questions have been sought to be referred to the Hon’ble High Court of Madras :-
(i) Explanation (1)(a) to Rule 57Q of Central Excise Rules 1944 defined capital goods as “Machines, Machinery, Plant, Equipment, Apparatus, Tools, or Appliances used for producing or processing of any goods or bringing about any change in any substance for the manufacture of final product”. When the main provision allowed credit of duty paid only on certain category of goods, is the Order of the Honourable Tribunal correct in extending the scope of capital goods credit by relying upon provisions of Rule 57 S of the Central Excise Rule, 1944.
(ii) The Hon’ble Tribunal in the case of M/s. Shanmugaraja Spinning Mills Ltd. (Order No. 118/97) and M/s. Brown & Burk Ltd. [Order Nos. 136 to 138/98,1998 (104) E.L.T. 694 (T)] had clearly brought out the distinct nature of the definition under Rule 57Q. In the light of this order, is the Hon’ble Tribunal correct in extending the benefit of capital goods in the present case?
(iii) The CEGAT is created under statute. When Rule 57S of the Central Excise Rules is only a procedural rule does the Hon’ble Tribunal have powers in extending the scope of Rule 57Q by relying upon Rule 57S of the Central Excise Rules, 1944?
2. Heard Shri S. Sankaravadivelu, ld. DR who reiterates the facts in both the reference applications and explains the questions proposed to be referred. He submits that Rule 57S cannot be read along with Rule 57Q as has been done in the case of M.M. Forgings in view of the other decisions cited in the said applications.
3. Heard Shri P.C. Anand, ld. Chartered Accountant for both the appellants. He submits that as far as the first question is concerned, the same does not pertain to a point of law but an appreciation of fact as to whether the said equipments were used for the manufacture of final product. Regarding the other questions proposed, he submits that the final order had relied upon a number or decisions apart from the decisions of the Tribunal in the case of M.M. Forgings which had reversed the earlier finding in the case of M/s. Velathal Spinning Mills Ltd. The Tribunal in its final order in question had also noted that the decision in the case of M.M. Forgings which reads Rule 57S harmoniously with Rule 57Q had been followed in 3 subsequent decisions by the Tribunal as indicated therein. Apart from this, the Tribunal had also considered that measuring and testing instruments like Spectrophotometer had been held to qualify for Modvat credit under Rule 57Q in the case of Grasim Cements as in 1997 (96) E.L.T. 354 (T). He further submitted that as far as the Worm Steel and Worm Shaft were concerned, he cites the case of Upper Ganges Sugar & Industries Ltd. v. C.C.E. wherein components of conveyor system for sugar-cane had been held as eligible for Modvat credit under Rule 57Q. He also submits that the Tribunal in the final order had also taken note of the decision of similar Worm Shaft and Worm Wheel in the case of Century Cement as in 1997 (95) E.L.T. 655 (T) as well as all other parts of conveyor belts in the case of Siel Sugars v. C.C.E. as in 1998 (98) E.L.T. 54 (T). He submits that each of these decisions are directly applicable to the facts of this case whereas the case laws in the reference applications do not directly deal with these items. He also submits that in view of the fact that the final order has relied upon the Supreme Court’s decision in the case of Rajasthan Chemical Works on the scope of the words ‘in the manufacture of goods’ and also the liberalised view on capital goods under Rule 57Q, therefore in view of the said decision of the Apex Court, no question out of this final order arise for reference to the Hon’ble High Court.
4. I have carefully considered the rival submissions and find that in the final order the Tribunal had come to the conclusion contained therein only after a detailed consideration of a number of decisions of the Tribunal. Three of these decisions as noted above were following the decisions of the Tribunal in the case of MM. Forgings with respect to the harmonious reading to Rule 57Q along with Rule 57S. Therefore, this issue is a well settled one and no point of law is required to be referred to the Hon’ble High Court in this matter. As far as the eligibility of the specific goods in question itself is concerned, there also the final order relies upon a number of earlier decisions of the Tribunal specific to the items in question and therefore, in those cases also, no point of law now emerges for being referred to the Hon’ble High Court. I also find that the concept of capital goods on the detailed judgement of the Hon’ble Apex Court in the case of Rajasthan State Chemicals Ltd. wherein the Hon’ble Apex Court had given detailed guidelines as to the meaning of capital goods used in the manufacture of final goods. The final order clearly follows the said guidelines. I find that since the basic issue itself as to whether these goods would therefore qualify as capital goods and the nature of role played by them in the manufacturing process including the nexus thereof to the manufacturing process has already been examined in the final order in the light of the Hon’ble Apex Court’s decision, therefore it cannot be said that a new point of law now emerges to be referred to the Hon’ble High Court at Madras.
5. In view of the aforesaid analyses and findings, the two reference applications of Revenue are rejected.