ORDER
1. The Revenue is aggrieved by grant of Modvat credit as capital goods in respect of two items such as Webbing relay and Operator panel rack by the Commissioner (Appeals). The benefit extended by the Commissioner (Appeals) in respect of these two items as noted from the order is reproduced below:
Webbing relay : For various applications of conveyors and warning signals, sirens are used to inform operators and staff about specific faults that occurs in equipment. Instead of continuous running of siren which will damage it and for better audibility the siren is switched on and off for a definite time to the account of few seconds. This is done automatically by the device called “WOBBLING RELAY” which switches OFF and ON automatically the supply for the siren. So credit allowed. Reliance placed on the case law 2000 (115) E.L.T. 87 (T).
Operator Panel Rack : In our copper smelter power supply is very critical as few hours of power failure may cause molten metal to solidify and make heavy loss to the plant and bring the production to halt. To avoid this we have two DG sets, which will supply the emergency power required during TNEB power failure. The time delay is minimised by using auto changeover system, which includes Siemens Simatic PLC, that automatically starts the DG and restores the emergency supply to the plant even if no operator is available. The PLC comes as a set of input and output modules which are arranged in a rack called “Operating panel rack” which is also accessible by the operator for trouble shooting and maintenance. This rack is essential for proper arrangement of the PLC modules for proper functioning. So credit allowed. Reliance placed in the case law 2000 (115) E.L.T. 87 (T).
Regarding the materials used for construction purposes, the appellants have not disputed the disallowance of the credit on the same. The materials used for construction purpose that is for civil work is not eligible for credit. So the order of the lower authority rejecting the credit on the same is upheld.
The Revenue contends that both these items fall under the Chapter Headings 84.71 and 85.31 of Central Excise Tariff respectively and excluded from the purview of capital goods as per Sl. Nos. 2 and 3 of the Table appended to Rule 57Q of Central Excise Rules/1944 as per the extract given in the appeal memo. Since they are excluded from the purview of capital goods as per SI. Nos. 2 & 3 of the Table, they cannot be treated as spares, components and accessories for grant of Modvat credit under Rule 57Q.
2. Ld. SDR argued on the basis of the grounds made out and the citations referred therein.
3. Ld. Counsel submits that the items although are not capital goods for classification as per Sl. Nos. 1 and 2 of the Table appended to Rule 57Q. They fall within Sl. No. 5 of the table appended to Rule 57Q as spares, components and accessories of the goods specified against Sl. No. 4 of the goods listed in Table appended to Rule 57Q. He submits that they are utilised along with the main Smelter Plant, which falls under the Chapter 84.79, which is included as capital goods. He submits that the Board of Central Excise has also clarified the grant of Modvat credit on these items under S. No. 5 of Rule 57Q in its Circular No. 276/110/96-TRU, dated 2-12-96. To a specific query from the Board, as to whether these items are components, spares and accessories, ld. Counsel submits that they will establish the same in the light of Apex Court judgment rendered in the case of CC v. Jawahar Mills reported in 2001 (132) E.L.T. 3. He further submits that all the above said items are used as electrical panels and controls and such goods were extended with benefit of Modvat credit by the Apex Court in the case of CC v. Jawahar Mills (supra).
4. On a careful consideration I notice that the only question, which is required to be considered in this case is as to whether the items fall under Sl. No. 5 as spares, components and accessories of the goods specified in Sl. No. 4 of the Table annexed to Rule 57Q. There is no dispute with regard to the main items like smelter plant falling under Ch. 84.79, which falls within S. No. 2 of the Table annexed to Rule 57Q. If the items in the classification are components, spares and accessories of the goods specified in S. No. 5 of the Table annexed under Rule 57Q then the benefit of Modvat credit under Rule 57Q is to be extended to the appellants for availing Modvat credit in terms of the Board’s Circular No. 276/110/96-TRU, dated 2-12-96, which clearly states that the capital goods are eligible for grant of Modvat credit under Rule 57Q, in case of the goods specified by the classification or by their description therein and also clarified that Clause (d) covers goods by their description as components, spares and accessories for the said capital goods and not merely by classification. Taking into overall facts and circumstances of the case, I am of the considered opinion that the benefit is required to be extended to be remanded for reconsideration in the light of the above Rule 57Q that the items in the classification are components, spares and accessories of the goods specified under Sl. No. 4 of the Table annexed. For this reason, the matter is remanded back to the original authority to reexamine the issue in the light of the Board’s circular and the Apex Court judgment cited before me. The observation made in this order should also be taken into consideration. The appeal is allowed by remand to the original authority. The appellants shall be afforded full opportunity to contest the case and also be permitted to adduce evidence to establish their case.